Value Addded Tax (VAT) Returns

Value Added Tax (VAT) Returns

 

Value Added Tax (VAT)  is a consumption tax payable on the goods and service consumed by any person whether government agencies, business organizations or individuals. The target of VAT is consumption of goods and services and unless an item is exempted by law, the consumer is liable to the tax.

A business or company registered for VAT is classified as a “Registered Person” and have to  pay 7.5% VAT on goods and services purchases but can claim credit for this tax (called input tax) when sold.

An output tax - 7.5% VAT (the VAT that is due on VATable supplies). is included in the price of all goods and services supplied by registered persons, who have to make regular VAT returns and either pays to, or receives from the FIRS, the difference of the input tax and the output tax

To make a claim for Input VAT credit, a registered person must hold a “Tax Invoice”.
Records and accounts have to be kept to facilitate  VAT administration and as support documents for future audit.procedure

 

Payment for VAT

Every taxable person is required to file VAT returns every month with the inland revenue service.
VAT returns (and payments) are normally made monthly to the Inland Revenue Service on or before 21st day of the month next following that in which the supply was made.Payment for VAT are to be made through designated banks with instruments/tellers-payable to Inland Revenue – VAT Account’’
 
The payment documents should be sent to the nearest Local VAT Office accompanied with a schedule showing the following details:
  • ·        Name, address and VAT registration number for each contractor/taxpayer
  • ·        The month of transaction: and
  • ·        The VAT payable.

All Oil & Gas and MDA companies serve dual role as payers and receiving agents of VAT and must also file monthly returns  on or before 21st day of the month of transaction using the appropriate schedule.

 

Tax Invoice and VAT

Every taxable Business or Company has a duty to issue a tax invoice for every single Vat able transaction carried out..A Tax invoice should be issued in support of the transaction. The customer also needs the Tax invoice to support his claim for Input VAT.

Details on the Tax Invoices:

  • Taxpayers Identification Number (TIN);
  • Name, address and VAT registration number;
  • Customer¡¦s name and address;
  • Type of supply;
  • A description of the goods and services supplied;
  • Quantity of goods or extent of services;
  • The rate of VAT;
  • The rate of any cash discount offered; and
  • The total VAT payable.

 

Penalty for late filing of Value Added Tax (VAT) returns

Where a taxpayer fails to file returns or pay the tax due, the relevant tax authority shall impose penalties and interest on the taxpayer, agent or employer from the due date of filing as provided in the applicable laws or regulations issued by relevant tax authorities.

Section 35 of VATA stipulates a penalty of N5,000.00 for every month in which the failure to make returns continues.

 

PROCESSING PERIOD

Filing of Value Added (VAT) Returns normally should be within 5working days, but allow upto 7 working days for processing..

The tax is collected on behalf of the Government by businesses and organizations which have registered with the Inland Revenue Services for VAT purposes,

VAT returns and payments are normally made monthly to the FIRS on or before 21st day of the month next following that in which the supply was made.

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