Tax Administration in Nigeria
Why is CIT administration important?
For one, it ensures that all resident & non-resident companies comply with relevant tax laws & the applicable taxes assessed are collected and used in the country’s development.
What is involved in CIT Administration?
Companies Income Tax administration involves tax filing & assessment, collection & enforcement, objection and appeal under the relevant laws & statutes.
Looking at the components, it might look complex, but we are going to break it down in a series of videos into the following:
- Filing & assessment
- Collection & enforcement
- Objection & Appeal.
For the purpose of thisvideo, we will focus on a general overview of CIT administration, including registration for tax purpose, rendition of returns, the penalty for late filing, and extension of the filing period. While the other components of CIT administration will be discussed in a 3 video series.
Registration for tax purposes
For a company to be a resident in Nigeria, it must be incorporated in Nigeria or have a significant presence in Nigeria. Once the above has been established, the company must register with FIRS for tax purposes. The documents required for registration includes CAC Incorporation certificate, completed Tax Identification Number Registration Form, Taxpayer Registration Input Form and Tax update form for Tax Promax registration.
Rendition of returns
For a newly incorporated company, the period to file returns is 18 months from the date of incorporation or 6 six months after the end of the company’s financial year end. The returns to be filed includes:
- Audited Financial statements
- Companies income and education tax computation
- Evidence of direct payment of the whole or a part of tax liability
- FIRS currently uses an online platform called tax ProMax to file returns and collect payment for Tax liabilities.
Penalty for late filing
Failure on the part of any company to file its returns within the due dates will lead to a penalty of 50,000 naira in the first month of default and 25,000 naira in subsequent months where the default continues.
Extension of time for filing returns
A company that wishes to extend the time for filing its tax return beyond the due dates should apply for an extension of filing before the due date with valid reasons.