FIRS to conduct a nationwide verification of Value Added Tax (VAT) and Withholding Tax (WHT) in Nigeria

by | Mar 13, 2014 | Uncategorized | 0 comments

The Federal Inland Revenue Service (FIRS) published an advertisement in many newspapers in Nigeria on 12 March 2014 that it will carry out a nationwide verification exercise of value added tax (VAT) and withholding tax (WHT) of companies. The one-month verification exercise is scheduled to be held from 12 March 2014 to 11 April 2014.

 

Tax Auditors from FIRS are expected to visit companies in order to verify their VAT and WHT records over the past 6 years. That is 2008 to 2013.

 

During the verification exercise, taxpayers are expected to provide the following documents for review:

 

  • VAT and WHT returns

 

  • Schedule of VAT and WHT, including evidence of payment such as Bank Pay-in-Slips, PayDirect Acknowledgement and official Receipts

 

  • Audited accounts, year-end trial balance, cash books and general ledger

 

  • Supporting documents for input taxes paid on raw materials, fixed assets etc

 

  • Sales and purchase records, especially invoices and receipts

 

  • Bank statements

 

Considering the manpower resources required for such a nationwide exercise, it is doubtful if FIRS has the capacity to review the records of all taxpayers. It may be expected that FIRS will adopt a risk-based approach in selecting companies to be visited.

 

Concerns may also be raised by taxpayers on the duplication of reviews, inspections and audits by FIRS as many companies have undergone tax audits by FIRS covering the same period and taxes. In Nigeria, tax audits have become a frequent exercise as a necessary check and balance against the self-assessment regime in use.

 

Without taking anything away from the taxpayers who may raise genuine concerns over the enormous amount of time required for this exercise and the potential disruptions to their businesses, the powers of FIRS to review taxpayers’ records as often as it deemed necessary is not in doubt.  We can only continue to request FIRS to take a cue from other jurisdictions where continued efforts are being made at making tax administration friendly, convenient and less burdensome for taxpayers.