Planning to file your returns? Do it before the due dates!

It takes more than just paying your taxes to be a good taxpayer; you must ensure you pay on or before your tax liability is due; if every taxpayer decides to pay his/her taxes only when they feel like, or when it is convenient, then they probably may not pay at all since there may never be such a time that is ‘convenient.’

For this reason, the tax laws are drafted in such ways as to ensure that taxes for a particular period are not carried over to other periods.

The statutory date required for a particular tax type to be remitted or filed is called “due date”. Any taxpayer who remits or files returns after the statutory due date is considered late and this attracts certain penalties.

The Federal Inland Revenue Service (FIRS) is saddled with the responsibility of ensuring that taxpayers remit and file their taxes as and when due, and also enforce penalties where there is lateness. The lax laws are actually considerate as they give adequate time to allow taxpayers prepare to make payment for each tax type.

Tax types and their statutory due dates

•Pay-As-You-Earn (PAYE): PAYE is expected to be remitted by the employer on behalf of the employee after deducting the appropriate amount of tax from the employee’s monthly salary.

The deducted tax is expected to be remitted not later than 10 days after the end of the month for which the tax was deducted or duty to deduct arose, i.e. 10th of the month after the month deduction was made (Operation of the Pay-As-You-Earn (PAYE) Scheme Regulations Section 7(1)). Annual returns must however be filed with the relevant tax authority, not later than 30 days after the end of the year of assessment – this is usually taken as 31st January of the succeeding year (Operation of the Pay-As-You-Earn (PAYE) Scheme Regulations Section 10(1)).

Failure of the employer to deduct or having deducted (failure) to pay to the relevant tax authority within the stipulated time from the day the amount was deducted or the time the duty to deduct arose, amounts to an offence under the Act. Section 94(1) of PITA (as amended) stipulates a penalty of N5,000.00 on conviction, plus N100 for every day in which the failure continues in addition to the principal amount to be remitted. Section 81 (3) of PITA stipulates a penalty of N500,000.00 for corporate bodies and N50,000.00 for individuals for late filing of annual returns upon conviction.

• Personal Income Tax (PIT): Due date for filing PIT is 90 days after the end of the year, this is usually taken as March 31, of the following year (PITA Section 41(3). The penalty for late filing of PIT is the same as that of PAYE as prescribed in the PIT Act in Section 82.

•Value Added Tax (VAT) and Withholding Tax (WHT): FIRS Information Circular 9304 on VAT prescribes that returns should be rendered on or before the 21st day of the Month following that in which the sales/supply was made. A taxable person who fails to submit VAT returns as stipulated is liable to a fine of N5,000 for every month in which failure continues (VAT Act Section 35). The same date applies to the WHT. Failure to deduct or to remit after deduction attracts a penalty of 10 percent of the amount of tax to be deducted in addition to the amount itself plus interest at prevailing rate (PITA Section 74(1) as amended).

•. Company Income Tax (CIT) and Education Tax (EDT): CITA Section 55(3)(a&b) explains that any company that has been in existence for more than eighteen (18) months is required to file returns every year not later than six (6) months after the end of its accounting year. For a new company however, returns is expected to be filed within eighteen (18) months after the company was incorporated or not later than six (6) months after the end of its first accounting period; whichever is earlier. A company can apply in writing for an extension of the date for filing their returns for a particular year, provided the application is made before the statutory due date and that the company shows a good cause for the inability to meet the statutory due date. The penalty for late filing of CIT as spelt out in the

Section 55 (3) a & b of ITA LFN 2004 (as amended) is N25,000.00 in the first month of failure and N5,000.00 for each subsequent month.

• Petroleum Profits Tax (PPT): This is peculiar to companies involved in petroleum operations. PPTA Section 30(1) prescribes that an estimated returns should be filed not later than two (2) months after the commencement of the accounting year (this is different from others that are filed at the end of the accounting year).

Section 30(2) further states that “if, at any time during any such accounting period, the company having made a return as provided for in sub-section 1 is aware that the estimate in such returns requires revision, then it shall submit a further return containing its revised estimated tax for such period”. In a case where a company has a good reason (satisfactory to FIRS) for which it cannot meet up with the timeframe stipulated in Section 30 – 33 of the PPTA, such company can write to request for an extension in the time which the Board (FIRS) may grant after necessary consideration.

At the end of the accounting year, a final tax returns is expected to be filed as stipulated by Section 30(2) of the PPTA not later than five (5) months after the accounting year end.

Section 51(1) stipulates an initial penalty of N10, 000 for failure to file returns within the period stated in the Act plus N2,000 for every day the failure continues.

Capital Gains Tax (CGT): This is the tax imposed on the gains made from the disposal of an asset such as a house, vehicle, machinery etc. It is charged at 10 percent. The due date for filing CGT according to the CGTA Section 17(3) is the last day in that year of assessment. It should however be noted that individuals will file CGT returns with the relevant State Board of Internal Revenue while companies will file with the FIRS.