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Economy | Taxes & Tariffs

FIRS Issues Public Notice on CIT Instalment Payment Application

Apr 02, 2021   •   by   •   Source: Proshare   •   eye-icon 785 views

Friday, April02, 2021   /10:09 PM / By Wole Obayomi/ Header Image Credit: FIRS

 

The Federal Inland Revenue Service (FIRS) on Monday,29 March 2021, issued a Public Notice to clarify the procedure forself-assessed taxpayers to apply for instalment payment of their companies' income tax (CIT), in line with Section 77 (5) of the CIT Act, Cap C21, LFN 2004[as amended by the Finance Act, 2019 (?óÔé¼?ôthe Act?óÔé¼?Ø)].

 

With three months to the filing deadline for companieswith the 31 December financial year-end, the FIRS has directed taxpayers whointend to settle their CIT in instalments to apply to the Board in writing withevidence of the first instalment of the CIT payable and full payment of theTertiary Education Tax (TET).  The FIRS reiterated that the finalinstalment of the CIT must be paid on or before the due date of filing to avoidthe enforcement of tax recovery provisions of CITA and the FIRS EstablishmentAct on any outstanding amount due.

 

Comments 

The Act requires taxpayers to apply for and obtain theFIRS' approval to remit their self-assessed CIT liabilities ininstalments.  In this regard, the Act only requires that the applicationfor instalment payments should be accompanied with "evidence of payment of thefirst instalment" of the CIT payable.  There is no requirement in the Actfor full payment of TET as a pre-requisite for applying to the FIRS forapproval to pay the CIT in instalment contrary to the FIRS' Public Notice.

 

TET is a separate tax from CIT, notwithstanding thatthe provisions relating to the collection of CIT applies to TET. Remarkably, both the Finance Acts, 2019 and 2020 did not amend Section 2(2) ofthe Tertiary Education Trust Fund (Establishment, etc.) Act which provides, "that the TET shall be due and payable within 60 days after the FIRS has servednotice of the assessment on a company".  Hence, it is unclear why the FIRShas included the full settlement of the TET as a requirement for granting theapplication for payment of CIT in instalments.  The FIRS may, therefore,need to revisit this requirement to ensure that it is consistent with theprovisions of the extant tax laws.

 

In the meantime, taxpayers who do not have sufficientWHT credit notes to offset their estimated 2021 tax year CIT liabilities, butwish to settle any outstanding amount in instalments, should proactively applyto the FIRS for approval of their payment plan.

 

Credits

* Thisstatement was first published in the Issue 3.5/ March 2021 Newsletter of KPMGof Wednesday, March 31, 2021. For further enquiries, please contact the author,Wole Obayomi via [email protected]


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Proshare Nigeria Pvt. Ltd.

 

 Proshare Nigeria Pvt. Ltd.

 



 Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

 

 Proshare Nigeria Pvt. Ltd.

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