FIRS: VAT, withholding tax must be remitted on the 21st of every month

The Federal Inland Revenue Service (FIRS) says all companies
must remit value-added tax and withholding tax by the 21st day of
every month.

According to a statement signed by Babatunde Fowler, the FIRS
chairman, some companies have been found not to deduct these taxes
at source.

VAT is a consumption tax placed on a product whenever value is
added at each stage of the supply chain – from production to the
point of sale.

Withholding tax, however, is deducted at source by organisations
or bodies making payments to suppliers of goods and services. They
are required to remit the deducted sum to the tax authority as
payments are being made to suppliers/vendors.​

“It has come to the notice of the service that some companies do
not deduct WHT/VAT from the compensation paid to their distributors
contrary to provisions of the ‘Companies Income Tax (Rates, Etc.
Deduction at Source (Withholding Tax) Regulations and Paragraph 3.8
of Federal Inland Revenue Service Information Circular No. 2006/02
of February 2006, which states that commission earned by
distributors/dealers will be subjected to WHT and VAT,” he
said.

“Following this discovery, the Service hereby puts all
companies, particularly those in the fast-moving consumer goods
sector on notice that compensation due to their distributors and
customers in the form of commission, rebates etc and by whatever
means of payments, whether by cash, credit note or even
goods-in-trade must be subjected to WHT/VAT at the appropriate
rates as applicable and remit same to the FIRS accordingly on or
before the 21st of every month.”

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