Banks join MTN and Airtel to collect VAT in new approval by FIRS
By Jeph Ajobaju, Chief Copy Editor
Banks and telecom firms, such as MTN and Airtel, are to collect Value Added Tax (VAT) on their taxable supplies from January 2023 and remit same to the Federal Inland Revenue Service (FIRS).
FIRS Executive Chairman Muhammad Nami gave the approval in a public notice he issued through his Media and Communication Assistant Johannes Wojuola.
“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 notice explained.
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VAT remittance
“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 notice said, per Vanguard.
“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.
“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,
“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.”
The FIRS said it has taken measures to ensure prompt payment of refundable input tax under this arrangement, and explained input tax claims, which include refunds, are subject to the limitations imposed by Section 17(2)(a) of the VAT Act.