Tax experts have faulted the recent decision by the Federal Inland Revenue Service to collect taxes from taxpayers before a self-assessment is filed.
The FIRS had requested for the payment of taxes in a recent advertisement, a situation which used to come after self-assessment of taxes was filed.
Following the development, tax experts said discerning taxpayers should treat such notice with caution.
A partner, Stransact Partners, Mr. Eben Akinyemi, said, “It is curious to note that the FIRS did not mention the 2011 Tax Administration (Self- Assessment) Regulation. This is the regulation that the FIRS relies on to demand for payment of taxes before filing of returns on self-assessment basis.
“That regulation cited section 55 of the Companies Income Tax Act, 2004 (as amended), Laws of the Federation of Nigeria CAP C21. The section cited stipulates the time within which a company is to file its returns. This is essentially within six months of the financial year end for an existing business. The FIRS then proceeded to demand payment of taxes beginning from January 2013 and final payment to be made on or before 30 June, 2013 for companies whose financial year end is after July 31, 2012.”
The Managing Consultant, WTS Nakyea & Adebiyi, Mr. Ali-Nakyea Abdallah, said, “The FIRS board, with the approval of the minister, can make regulations giving full effect to provisions in the Act and not to pass laws, which is the exclusive preserve of the legislature.
“It is important to mention that tax is a creature of statute; thus, tax imposition, collection, debt enforcement and management should all be backed by statute, otherwise they crumble as being arbitrary and biased.”
Abdallah, who also lecturers at the Ghana School of Law, said, “If the FIRS finds the six-month too long a waiting period, the only remedy is to get the section amended. In Ghana, we had a similar six-month waiting period till an amendment was effected to reduce it to four months after the end of the taxpayer’s accounting date.
“However, the provision for an application for extension was maintained and the Ghana Revenue Authority can grant the extension for a period not exceeding two months. I guess the FIRS can take a cue from the GRA’s approach by seeking an amendment by the legislature.”