FIRS permits MTN, Airtel, banks to withhold VAT charged to them

The Federal Inland Revenue Service (FIRS) has permitted telecom operators like MTN, Airtel, as well as money deposit banks in Nigeria to withhold Value Added Tax (VAT) charged on all taxable supplies made to them and remit to the Service with effect from January 1, 2023.

This was made known in a public statement issued November 1st, signed by the Executive Chairman, Muhammad Nami, which 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.

“With effect from January 1, 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,” it stated.

It added that 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. This is however separate from VAT due to the companies’ taxable supplies.

Read also: The implications of global minimum tax on company tax revenue of developing countries

The notice further explained that a supplier whose output tax is withheld 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,” it added.

It further noted that the Service has instituted adequate measures to ensure prompt payment of refundable input tax under this arrangement, while also stating that input tax claims, which include refunds, are subject to the limitations imposed by Section 17(2)(a) of the VAT Act.