Editor’s Note: This article was originally written on July 19, 2021 and is being republished here for archival purposes.
Subject: NOTICE ON ONLINE FILING AND PENALTIES OF THE VALUE ADDED TAX (VAT) PROVISIONS IN THE FINANCE ACT 2019
This Information Circular is issued to Clients of Gbenga Badejo & Co. (Chartered Accountants) & GBC Professional Services for information on relevant provisions of the Act.
Introduction
The Finance Act 2019 amended some provisions of the Value Added Tax Act Cap V1, LFN 2004 (as amended).
Online Filing
In keeping with its mandate to digitize tax administration in Nigeria, the Federal Inland Revenue Service (FIRS) now requires all taxpayers to file their Value Added Tax (VAT) returns exclusively on the updated FIRS e-filing platform (TaxPro MAX).
The login details to access this platform are the same as those used for corporate Tax Clearance Certificate (TCC) application.
Taxpayers must complete the online filing process and pay online or generate a Remita Retrieval Reference number for the payment of the relevant taxes either through the Remita portal or at the Bank using the unique Payment Reference Number (PRN).
Consequently, it is imperative that all taxpayers complete their online registration on the e-filing platform to avoid rejection of their manual returns at the Tax office and also the attendant penalties for late returns.
Penalty Regime
The following are the new penalty provisions:
| Section As modified by the Finance Act 2019 | Offence | Penalty | |
| Initial Month (₦) | Subsequent Months (₦) | ||
| S.8-VAT Act | Failure to register for VAT | 50,000.00 | 25,000.00 |
| S.28-VAT Act | Failure to notify of change of address or permanent cessation of trade or business | 50,000.00 | 25,000.00 |
| S.35- VAT Act | Failure to submit VAT returns | 50,000.00 | 25,000.00 |
| S.19 VAT Act | Failure to remit VAT | VAT Amount + 10% of VAT Amount + interest at CBN MRR | |
Section 8, 28 & 35 of the VAT Act imposes a penalty of ₦50,000 for the first month in which the failure occurs; and ₦25,000 for each subsequent month in which the failure continues.
Illustration on failure to submit returns
ABC Limited, a taxable person under the VAT Act approaches FIRS Ikeja Tax Office in January 1, 2021, to file its annual returns for 2020 assessment year. In the course of reviewing its file, it was discovered that the company failed to submit VAT returns for year 2020 (January – December) transactions. The applicable
penalties are determined as follows:
NOTE:
The first month for which it fails to submit returns attract ₦50,000; subsequent months attracts ₦25,000.
| MONTH | JAN | FEB | MAR | APR | MAY | JUN | JUL | AUG | SEP | OCT | NOV | DEC | CUMM. TOTAL |
| (₦) | (₦) | (₦) | (₦) | (₦) | (₦) | (₦) | (₦) | (₦) | (₦) | (₦) | (₦) | (₦) | |
| JAN | – | ||||||||||||
| FEB | 50,000 | – | 50,000 | ||||||||||
| MAR | 25,000 | 50,000 | – | 125,000 | |||||||||
| APR | 25,000 | 25,000 | 50,000 | – | 225,000 | ||||||||
| MAY | 25,000 | 25,000 | 25,000 | 50,000 | – | 350,000 | |||||||
| JUN | 25,000 | 25,000 | 25,000 | 25,000 | 50,000 | – | 500,000 | ||||||
| JUL | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | 50,000 | – | 675,000 | |||||
| AUG | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | 50,000 | – | 875,000 | ||||
| SEP | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | 50,000 | – | 1,100,000 | |||
| OCT | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | 50,000 | – | 1,350,000 | ||
| NOV | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | 50,000 | – | 1,625,000 | |
| DEC | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | 50,000 | – | 1,925,000 |
| TOTAL (₦) | 300,000 | 275,000 | 250,000 | 225,000 | 200,000 | 175,000 | 150,000 | 125,000 | 100,000 | 75,000 | 50,000 | – | 1,925,000 |
The cumulative amount of penalty for failure to file VAT returns monthly is ₦1,925,000 only. This is exclusive of the actual VAT to be remitted and the attendant interest and penalty that will be charged.
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