The Federal Inland Revenue Service (FIRS) has introduced tax relief measures to address the impact of the coronavirus (COVID-19) pandemic on taxpayers:
- Extension of the due date for filing of value-added tax (VAT) and withholding tax returns from the 21st day of the month to the last business day of the month, following the month of deduction
- Extension of the due date for filing of the companies income tax return by one month
- Use of electronic platforms for paying taxes and processing tax clearance certificates
- Electronic filing of tax returns by taxpayers
- Filing of tax returns by taxpayers without audited financial statements which must be submitted within two months of the revised due date of filing
- Proposed creation of a portal where documents required for desk reviews and tax audits will be uploaded by taxpayers for online access by the tax authority.
- Submission of tax returns online by taxpayers via efiling.firs.gov.ng or by designated e-mail accounts published by the FIRS
- Taxpayers facing challenges in sourcing foreign exchange (FOREX) to settle tax liabilities on their FOREX-denominated transactions are permitted to pay the Naira equivalent, based on the prevailing Investors & Exporters FOREX window rate on the day of payment.
- Extension of personal income tax (PIT) returns filing deadline for personnel of Foreign Affairs, Military and Police, and non-resident persons by three months from 31 March 2010 to 30 June 2020.
In addition, an “Emergency Economic Stimulus Bill, 2020” was passed by the House of Representatives (HoR) to:
- Grant a tax rebate of 50% of the actual amount due or paid as pay-as-you-earn, to Nigerian companies who retain all their employees from 1 March 2020 to 31 December 2020.
- Suspend import duties on medical equipment, medicines and personal protective gear required for treatment and management of COVID-19 for three months, effective 1 March 2020.
- Introduce a new moratorium on mortgage obligations of Nigerians under the National Housing Fund.
The Bill is yet to be passed by the Senate.
The FIRS recently announced the following additional measures to mitigate the impact of COVID-19 on taxpayers:
- Waiver of late returns penalty for taxpayers who pay their tax liabilities early but submit their tax returns later. Evidence of tax payment can be forwarded to the relevant FIRS e-mail address or submitted later to the appropriate tax office
- Extension of the timeline for remittance of VAT from the 21st day to the last day of the month, following the month of deduction
- Taxpayers facing challenges in sourcing foreign exchange (FOREX) to settle tax liabilities on their FOREX-denominated transactions are permitted to pay the Naira equivalent, based on the prevailing Investors & Exporters FOREX window rate on the day of payment
- Extension of personal income tax (PIT) returns filing deadline for personnel of Foreign Affairs, Military, and Police, and non-resident persons by three months from 31 March 2010 to 30 June 2020
- Indefinite suspension of all field tax audit, investigation, and monitoring visits.
Various State Internal Revenue Services announced the extension of the filing deadline for annual returns for employees and self-employed persons;
- Lagos Internal Revenue Service granted a two (2) months extension – 31 March 2020 to 31 May 2020.
- Federal Capital Territory Internal Revenue Service granted a three (3) months extension – 31 March 2020 to 30 June 2020.
Donation to COVID-19 Fund to be tax-deductible – Minister of Finance (MoF)
The MoF, in a press statement, promised to issue an Executive Order granting additional tax reliefs to organizations that make donations to the COVID-19 fund in Nigeria.
The Executive Order is yet to be issued.
- In Nigeria, no specific relief is provided by the VAT law with regard to bad debts. In practice, companies can make adjustments for VAT on bad debts once it is certain that the agreed payment that is subject to VAT has truly become irrecoverable. This is because taxpayers are required to act as agents of the tax authority (FIRS) and collect and report VAT on a cash basis.
- Invoices need to be structured so that they clearly state the nature of a transaction so that the FIRS does not subject an exempted or zero-rated good or service to VAT at a rate of 7.5%.