Covid-19: FIRS waives interest, penalty on outstanding tax liabilities

The Federal Inland Revenue Service (FIRS) has issued a public notice disclosing its decision to waive interest and penalties on outstanding tax debts arising from desk reviews, tax audits and investigations.

“We commend the FIRS for its commitment to alleviating the impact of the Covid-19 pandemic on businesses. The waiver of interest and penalties on outstanding tax liabilities is a welcome development in light of the negative impact of Covid-19 pandemic on taxpayers”,

E&Y Insight: said tax experts at KPMG in their recent note.

To be eligible for the relief, FIRS KPMG noted that the deadline of May 31, 2020 to make full payment of outstanding tax debts may be challenging “as most businesses are currently experiencing loss of revenue and cashflow constraints”.

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“Therefore, some taxpayers who genuinely want to take advantage of the relief may not have the financial resources to make full payment before the May 31, 2020 deadline. The FIRS should, therefore, consider extending the deadline to allow such taxpayers to pay their principal tax liabilities in instalments as their cashflow permits within the shortest time possible,” the tax experts at KPMG noted.

The decision by FIRS follows its earlier palliative measures and those of other agencies of the Federal Government to mitigate the impact of the Coronavirus (Covid-19) pandemic on taxpayers.

“The relief does not cover disputed tax audit liabilities in respect of which affected taxpayers have ascertained their undisputed tax positions.

“The FIRS should address this category of taxpayers who may want to take advantage of the relief and remit their undisputed tax liabilities pending resolution of their disputes with the FIRS. This would increase FIRS’ collection and relieve the affected taxpayers’ cashflow of the associated cost of penalty and interest”, KPMG stated further.

Iheanyi Nwachukwu

Iheanyi Nwachukwu, is a creative content writer with almost two decades journalism experience writing on banking, finance, capital markets, and tax. The multiple awards winning journalist is Assistant Editor, BusinessDay. Iheanyi holds BSc Degree in Economics from Imo State University; Master of Science (MSc) Degree in Management from University of Lagos. Iheanyi has attended several work-related trainings including (i) Advanced Writing and Reporting Skills (Pan African University, Lagos); (ii) News Agency Journalism (Indian Institute of Mass Communication {IIMC}, New Delhi, India); and (iii) Capital Markets Development and Regulations (International Law Institute {ILI} of Georgetown University, Washington DC, USA). Other trainings Iheanyi attended include: Economic/Political Risk Analysis (By Thomson Reuters Foundation); International Financial Journalism (IFJ) (By PMA Media Training, UK); Effective Business Writing Skills (By Phillips Consulting); Reporting on Corporate Governance (By International Finance Corporation (IFC) & Thomson Reuters Foundation UK); etc. In addition, he has participated in high-level economy & markets events in Dubai, South Africa, Morocco, and other African countries like Zambia, Ghana and Gambia.