The Federal Inland Revenue Service (FIRS) has appointed MTN and Airtel, as well as commercial banks and deposit money banks in Nigeria, to withhold and remit Value Added Tax (VAT) on all taxable supplies made to them.
According to a statement from the Special Assistant to the Executive Chairman of FIRS on Media and Communication, Johannes Oluwatobi Wojuola, who was backed up by a public notice issued on November 7, 2022, and signed by the service’s Executive Chairman, Muhammad Nami.
Nami explained in the notice the role of the companies as well as the obligations of their suppliers in terms of VAT withholding.
Excerpts of the Notice
Nami, in the notice, said;
This Notice is given to all persons carrying on trade, profession or business of any kind, tax practitioners and the general public that, with effect from 1st January, 2023; in line with the provisions of Section 14(3) of the Value Added Tax Act Cap. V1 LFN 2004 (as amended), the following companies are appointed to withhold or collect VAT charged on all taxable supplies made to them: MTN; Airtel; and all money deposit banks—as defined by the CBN Guidelines.
The FIRS noted that these companies were expected to remit the tax they would withhold on or before the 21st day of the month immediately following the month the tax was withheld, in the format prescribed by the Service.
He said;
The companies shall remit the tax withheld or collected, in the currency of transaction, to the Service on or before the 21st day of the month immediately following the month the tax was withheld or collected;
The tax withheld or collected under this notice shall be remitted in the format prescribed by the Service but separately from VAT due on the companies’ taxable supplies.
The notice further explained the options that were available to suppliers of these companies whose output tax is withheld.Â
The notice stated,
A supplier whose output tax is withheld, as provided in this notice, may deduct the input tax paid on the goods purchased or imported to make the taxable supply from the output tax collected on other taxable supplies,Â
And where the input tax paid to make the supply is not fully recovered from the output tax on other taxable supplies, the balance is refundable to the supplier; provided that a supplier who is entitled to a refund may utilise the amount refundable to offset future VAT liability or request for a cash pay-out.
It also stated that under this arrangement, the Service had implemented adequate measures to ensure prompt payment of refundable input tax, while also stating that input tax claims, including refunds, are subject to the limitations imposed by Section 17(2)(a) of the VAT Act.
