Deadlines for Filing Tax Returns in Nigeria

Deadlines for Filing Tax Returns in Nigeria

Under existing Nigerian tax laws, particularly the Companies Income Tax Act (CITA) and other relevant legislation, the deadlines for filing tax returns depend on the type of tax and the nature of the business. Here are the key deadlines:

Companies Income Tax (CIT):

• New Companies: Must file CIT returns within 18 months from the date of incorporation or within 6 months after the end of their first accounting period, whichever is earlier.
• Existing Companies: Must file annual CIT returns within 6 months after the end of their fiscal year. For companies with a fiscal year aligning with the calendar year (January–December), the deadline is June 30 of the following year.
• Petroleum Profit Tax (PPT): Estimated tax returns must be filed within 2 months of the fiscal year (by February 28/29), and actual tax returns within 5 months after the end of the accounting period (by May 31).
• Value Added Tax (VAT): VAT returns must be filed and remitted by the 21st of the following month for the previous month’s transactions.
• Pay-As-You-Earn (PAYE): Employers must file PAYE returns for employees’ emoluments by January 31 of each year for the preceding year. PAYE remittances are due by the 10th of the following month.
• Capital Gains Tax (CGT): CGT returns must be filed and remitted by June 30 and December 31 of the same year upon disposal of a chargeable asset.
• Industrial Training Fund (ITF): Annual ITF returns, including payroll details and 1% deductions, are due quarterly on April 1, July 1, October 1, and January 1.

Recent Proposals (Finance Act 2023 and Others):

• The Finance Act 2023 amended VAT filing deadlines, effective from July 2023, requiring VAT returns to be filed by the 21st of the following month, reinforcing the existing timeline.
• Proposed reforms, such as the 70% windfall tax on banks’ foreign exchange transaction profits for 2023–2025, introduce retrospective filing requirements, which may complicate compliance for affected entities.
• The Expatriate Employment Levy (EEL), launched in February 2024, requires employers of expatriates to file returns and remit contributions, with deadlines varying based on specific regulations.

2. How Best to Meet the Deadline

To ensure timely compliance with tax filing deadlines, companies can adopt the following strategies:

• Register with FIRS and obtain a Tax Identification Number (TIN): All businesses must register with the Federal Inland Revenue Service (FIRS) and obtain a TIN, which is mandatory for tax-related activities. Early registration streamlines filing processes.
• Use the FIRS TaxPro-Max Platform: The FIRS’ electronic filing platform, TaxPro-Max, allows for the efficient filing of naira-denominated tax returns. Familiarize yourself with the platform and file early to avoid technical issues.
• Engage Professional Tax Consultants: Hire accountants or tax advisors well-versed in Nigerian tax laws to ensure accurate calculations and compliance with filing requirements.
• Set Calendar Reminders: Mark key deadlines (e.g., June 30 for CIT, January 31 for PAYE) and set reminders well in advance to avoid late submissions.
• Leverage Tax Software: Use reliable tax software to minimize errors in calculations and streamline the preparation of returns.
• Start Early: Begin gathering financial records and preparing returns at least 1–2 months before the deadline to account for any complexities or discrepancies.
• Update FIRS with Changes: Promptly notify the FIRS of changes in business details (e.g., address, directors) to avoid miscommunication or penalties.
• Pay in Installments (if Eligible): Companies filing within 6 months of their accounting year-end can apply to the FIRS to pay CIT in up to three installments, easing cash flow pressures.

3. Documents Required to Stay Compliant

To file tax returns and maintain compliance, companies must prepare and submit specific documents. The requirements vary slightly depending on the type of company (resident or non-resident) and tax type:

• For Companies Income Tax (CIT):
  • Audited financial statements (balance sheet, profit and loss statement) for resident companies and non-resident companies with a permanent establishment (PE).
  • Tax computation schedules showing taxable profits and allowable deductions.
  • Evidence of tax payments (e.g., receipts for withholding tax or prior tax payments).
  • Tax Identification Number (TIN).
  • For non-resident companies in shipping or airline businesses, certified gross revenue statements and invoices issued to Nigerian customers may suffice instead of audited financials (per Finance Act 2023 amendments).
  • Tax Clearance Certificate (TCC) for the preceding three years, if applicable, especially for regulatory approvals.
• For Value Added Tax (VAT):
  • Detailed records of taxable supplies and input/output VAT.
  • Invoices and receipts for transactions.
  • Proof of VAT charged (for foreign digital service providers).
  • VAT returns filed via the TaxPro-Max platform.
• For Pay-As-You-Earn (PAYE):
  • Employee payroll records, including emoluments paid.
  • Evidence of PAYE deductions and remittances to the State Internal Revenue Service (SIRS).
• For Capital Gains Tax (CGT):
  • Documentation of asset disposal (e.g., sale agreements for property, shares, or digital assets like cryptocurrency).
• Industrial Training Fund (ITF):
  • Annual payroll records.
  • Evidence of 1% ITF deductions and remittances.
• General Requirements:
  • Updated company details with the FIRS (e.g., address, directors).
  • Proof of registration with the Corporate Affairs Commission (CAC) for Nigerian companies.
  • For non-resident companies, evidence of a fixed base or Significant Economic Presence (SEP) in Nigeria, if applicable.

Recent Proposals Impacting Documentation:

• The Finance Act 2023 simplifies requirements for non-resident companies in the shipping or airline sectors by allowing gross revenue statements instead of audited financial.
• The 2022 VAT Modification Order requires foreign digital service providers to register for VAT and provide proof of VAT charged on invoices.

4. Implications and Penalties for Not Filing Before Deadlines

Non-compliance with tax filing deadlines in Nigeria carries significant financial and legal consequences, with penalties varying by tax type and company size. The FIRS and state tax authorities enforce strict measures, including desk reviews, audits, and legal action.

Penalties for Companies Income Tax (CIT):

• Late Filing:
  • Penalty of ₦25,000 for the first month of default, plus ₦5,000 for each subsequent month.
• Late Payment:
  • 10% penalty on the unpaid tax amount, plus interest at the commercial rate.
• Underreporting Income:
  • 10% penalty on the underreported amount, warden: plus interest.

Petroleum Profit Tax (PPT):

• Late Filing:
  • Initial penalty of ₦10 million, plus ₦2 million per day of continued failure.
• Late Payment:
  • 5% penalty on the unpaid tax amount.

Value Added Tax (VAT):

• Failure to Register for VAT:
  • ₦50,000 for the first month, plus ₦25,000 for each subsequent month.
• Late Filing/Remittance:
  • Penalties and interest charges apply, though specific amounts may vary.

Pay-As-You-Earn (PAYE):

• Late Remittance:
  • 5% penalty on unpaid amounts per month or part thereof.
• Late Filing:
  • Additional fines may apply, depending on state regulations.

Industrial Training Fund (ITF):

• Non-Compliance:
  • Penalties and interest charges are imposed, though specific amounts are not detailed in the sources.

General Implications:

• Desk Reviews and Audits: The FIRS conducts desk reviews immediately after filing, followed by potential tax audits within six years (or longer if fraud is suspected).
• Best of Judgment (BOJ) Assessments: If returns are not filed or are deemed incomplete, the FIRS may issue a BOJ assessment, potentially inflating tax liabilities.
• Legal Action: Non-compliance may lead to criminal consequences, including fines or imprisonment for company officers upon conviction.
• Business Disruptions: Tax authorities may seal company premises, issue non-compliance stickers, or prosecute officers publicly.
• Tax Clearance Certificate (TCC) Issues: Failure to file or pay taxes may prevent obtaining a TCC, which is required for regulatory approvals in sectors like shipping and aviation.

Differences for Small vs. Large Companies:

• Small Companies (Turnover < ₦25 million):
  • Benefit from a 0% CIT rate under the Finance Act 2021, reducing tax liability but not filing obligations. Small companies are still required to file for tax returns even when they have no tax obligation.
  • May face less scrutiny, but are still subject to audits and BOJ assessments.
• Large Companies (Turnover > ₦100 million):
  • Face a 30% CIT rate and stricter enforcement due to higher revenue stakes.
  • Higher penalties (e.g., ₦10 million for late PPT filing) and greater risk of public scrutiny or prosecution.
  • Proposed 70% windfall tax on banks (2023–2025) adds retrospective compliance challenges for large financial institutions.

Defenses Against Penalties:

• Penalties may be waived if the company provides a valid reason for non-compliance, though this is discretionary.
• Challenging incorrect tax assessments is possible, but recent case law (e.g., UBA v Anambra SIRS) limits the FIRS’ ability to issue BOJ assessments without court orders for missing information.

5. Additional Notes on Recent Proposals

• Digital Tax Reforms: The 2021 Finance Act and 2022 VAT Modification Order require foreign digital service providers (e.g., Netflix, Google) to register for VAT and file returns, increasing compliance burdens for non-resident companies.
• Windfall Tax on Banks: The proposed 70% tax on foreign exchange profits (2023–2025) introduces retrospective filing requirements, potentially requiring large companies to amend past returns.
• Expatriate Employment Levy (EEL): Employers of expatriates must comply with new filing and payment obligations, with penalties for non-compliance.

Conclusion

To stay compliant in Nigeria, companies must file tax returns by the specified deadlines (e.g., June 30 for CIT, January 31 for PAYE, May 31 for PPT), using the TaxPro-Max platform and ensuring all required documents (e.g., audited financials, revenue statements, invoices) are submitted. Small companies benefit from lower or zero CIT rates but face significant non-compliant penalties relative to their size, while large companies face stricter enforcement and higher penalties. Engaging tax professionals, leveraging e-filing, and starting preparations early are critical to avoiding penalties, audits, and legal consequences.

For more info on Deadlines for Filing Tax Returns in Nigeria and  Business & Management Consultancy, kindly contact us at :

E-mail:         care@sowprofessional.com

Website:     www.sowprofessional.com                                                                                                       

Phone:        07038254989     

Whassapp: 07038254989