Penalties For Late Filers, ABC Of Tax Returns (2)
As a follow up to last week’s publication, below is a continuation of the article that highlights the requirements for filing returns, due dates and penalties for late filing of returns as it pertains to various tax types.
Last week’s edition focused on Company Income Tax (CIT), Education Tax (EDT), National Information and Technology Development Levy (NITDL), Estimated Petroleum Profit Tax (PPT), Final PPT, Personal Income Tax (PIT).
This week’s edition wraps up the article as it centres on Annual Pay as You Earn (PAYE), Monthly Pay as You Earn (PAYE), Withholding Tax (WHT) and Transfer Pricing (TP).
Requirements for filing annual returns of Pay-As-You-Earn (PAYE) by employers
Section 81 (2) of PITA (as amended) and Regulation 10 of the Operation of PAYE Regulations provide that an employer shall render to the relevant tax authority, a return on each employee showing total emoluments of each employee during the year, the tax relief, if any, and the total tax deducted from the employee. This is to be done on a Form H1 or such other form as may be approved or prescribed by the relevant tax authority.
Due Date
Annual PAYE returns should be filed not later than January 31, in respect of all employees of the employer in the preceding year.
Penalties for late filing of annual returns of PAYE by employers
Section 81 (3) of PITA stipulates a penalty of N500,000.00 for corporate bodies and N50,000.00 for individuals upon conviction.
Requirements for filing monthly PAYE returns by employers
The schedule to be attached to the payment and evidence of remittance should contain the following information:
a) Taxpayer information (employer):
Taxpayer/agent name and address
Taxpayer/agent TIN
Transaction amount
Transaction date
b) Employees’ information:
Staff TIN
Staff name
Basic salary
Allowances
Transaction date (DD/MM/YY)
Tax amount
Period covered
Due Date
Evidence of remittance should be filed not later than 10th of every month
Penalties for late filing of monthly PAYE returns by employers
Penalty for non-deduction and failure/late remittance under Section 40 of the Federal Inland Revenue Service (Establishment) Act 2007 applies.
Upon conviction, the penalty is at 10 per cent per annum of the tax not remitted and interest at the prevailing Central Bank of Nigeria re-discount rate and imprisonment for period of not more than three (3) years.
Requirements for filing Withholding Tax (WHT) returns
Regulation 4 of the Companies Income Tax (rates, etc. of tax deducted at source (WHT)) regulations as well as Regulation 3 of PIT (rates, etc. of tax deducted at source (WHT)) regulations provide that a person who deducts tax from a payment shall, when the payment is credited or paid, whichever is earlier, submit, to the relevant office of FIRS, the evidence of remittance made to the designated bank of the tax deducted. The submission shall be accompanied with a statement containing the following information:
The name and address as well as the TIN of the person from whom the tax was deducted.
The nature of activity or service in respect of which the payment was made.
The gross amount paid or payable.
The amount of tax deducted.
The period to which the payment relates.
Similar provisions can be found in Sections 78, 79 & 80 of CITA as well as Sections 69, 70, 71 & 73 of PITA.
Due Date
Evidence of remittance should be filed not later than thirty (30) days from the date the tax was deducted or the time the duty to deduct the tax arose.
Penalty for late filing of Withholding Tax (WHT) returns
WHT only has penalties for non-deduction and failure/late remittance of deduction.
Upon conviction, the penalty is 10 per cent per annum of the tax not remitted and interest at the prevailing Central Bank of Nigeria(CBN) re-discount rate and imprisonment for period of not more than three (3) years (Section 40 of the Federal Inland Revenue Service (Establishment) Act 2007).
Requirements for filing Value Added Tax (VAT) returns
Section 15 of the VAT Act (VATA) Cap. V1 LFN 2004 (as amended) requires taxable persons to render returns of all taxable goods and services purchased or supplied by him during the preceding month to FIRS.
The Service has prescribed the use of VAT Form 002 for filing the monthly VAT returns.
Due Date
Returns should be filed not later than 21st day of the month following that in which the purchase or supply was made.
Penalty for late filing of Value Added Tax (VAT) returns
Section 35 of VATA stipulates a penalty of N5,000.00 for every month in which the failure to make returns continues.
Requirements for filing Transfer Pricing returns
Regulation 6 of the Income Tax (Transfer Pricing) Regulations No.1, 2012 provide for the filing of Transfer Pricing returns and the documents required to be filed. The provisions under the regulations refer to companies which have relationship with any other company (i.e.) through control, management or ownership.
The following are the content of Transfer Pricing returns:
TP Declaration Form (required only in the first year but must be updated should there be material changes in the information provided).
TP Disclosure Form (annually whether or not there are controlled transactions).
Copy of audited financial statement.
Copy of Self-Assessment Form.
Copy of income tax computations (including all relevant schedules).
The taxpayer should write a covering letter for the Transfer Pricing returns; package all the documents into a separate envelope and mark the envelope “TP RETURNS”.
The package containing the TP returns should be delivered to the tax office (where the taxpayer’s file is resident) along with the annual income tax returns and obtain acknowledgement of submission at the tax office.
Due Date
Same due date with CIT/PPT returns and must be filed when filing CIT/PPT returns.
Penalty for late filing of Transfer Pricing returns
Regulation 13 of the Income Tax (Transfer Pricing) Regulations specify same penalty as specified for failure to file CIT/PPT returns.
Please note that apart from penalty for late filing of returns, many of these tax types also have separate penalties for late remittance.
