By Abdulateef Olatunji ABDULRAZAQ, Founder, Taxmobile.Online and Principal Partner, AOA Professional Services
The Nigerian Tax Administration entails the administration, management, conduct, direction and supervision of the execution and application of the tax laws in the country. It also entails the development and formulation of tax policy relating to existing or proposed tax laws.
This will include assessment, collection, enforcement, litigation, publication and statistical gathering functions under such laws.
Tax administration involves the registration, assessment, returns, collection, compliance monitoring, compliance enforcement, sanction, taxpayer’s education and awareness and any other activity that can improve the efficiency and effectiveness of taxation.
1. Registration of Taxpayer: Registration is done by submitting relevant information as required by the relevant tax authority. Registration for tax purposes is a legal obligation of every person/Company who is required to pay tax in Nigeria.
2. Assessment of Taxpayers: Tax authorities assess taxpayers to taxes administered by them and they can also reassess tax returns rendered by taxpayers. These are assessments based on the information contained in the taxpayer’s returns.
The tax computations together with the Capital allowances computations are enclosed along with the audited accounts and such assessment could either be self-assessment or relevant tax authority assessment.
3. Tax Returns: This is a form on which a taxpayer makes an annual statement of income and personal circumstances, used by the tax authorities to assess tax liability. This is usually periodically (annually, monthly) or as the need arises.
4. Tax Collection: Tax collection is after assessment, either the taxpayer self-assess himself or is assessed/reassessed by the tax authority. The mode of tax remittance is usually determined by the relevant tax authority.
5. Compliance Monitoring: Federal Inland Revenue Service(FIRS) and State Internal Revenue Service usually monitor the tax compliance of taxpayers by assessing their adherence to the provisions of the relevant tax statute.
This is usually done by tax authorities at their respective offices by checking the taxpayer’s file and/or visiting the taxpayer to obtain further relevant information to complement information at their disposal to assess the taxpayer’s compliance with the provision of relevant tax laws.
6. Compliance Enforcement: Tax compliance means taxpayers’ decision to comply with tax laws and regulations by paying taxes timely and accurately. Tax authorities’ compliance can be enforced on the taxpayer.
7. Sanction: Contravention with the provision of relevant tax laws may lead to penalty or conviction. Contraventions include failure to furnish required information or failure to keep a required record, or any other non-compliance with the relevant provision of required tax law.
8. Tax Education and Awareness: it is a means of empowering taxpayers, giving them knowledge and tools to be able to better understand the tax system, increase their tax morale and finally, increase tax compliance.
This is usually done through the issuance of tax circulars and other publications to aid taxpayers’ understanding of tax statutes.
The Nigerian Tax Administration Taxpayer’s Rights and obligations under the Nigerian Tax Charter
The Taxpayers’ Charter (the Charter) outlines your rights and obligations. It explains what you can expect from FIRS or SIRS in administering the tax systems in Nigeria. Please see below the Taxpayer’s Charter:
Taxpayers are entitled to expect the Federal Inland Revenue Service:
1. To be fair
- By settling your tax affairs impartially
- By expecting you to pay only what is due under the law
- By treating everyone with equal fairness
2. To help you
- Get your tax affairs right
- Understand your rights and obligations
- By providing clear leaflets and forms
- By giving you information and assistance at their offices
- By being courteous at all times
3. To provide an efficient service
- By settling your tax affairs promptly and accurately
- By keeping your private affairs strictly confidential
- By using the information you give us only as allowed by the law
- By keeping to a minimum your cost of complying with the law
- By keeping costs down
4. To be accountable
- By setting standards for themselves and publishing how well they live up to them
5. If you are not satisfied, it is expected that the FIRS
- Tells you exactly how to complain
- Can ask for your tax affairs to be looked at again
- Can appeal to an independent tribunal
- Can refer your complaint to the Ombudsman
6. In return, the taxpayer is expected to
- Be honest
- Give accurate information
- Pay tax on time
Tax administration in Nigeria is vested in the three (3) tiers of government. Taxes payable to the Federal Government are administered by the Federal Inland Revenue Service (FIRS), while those payable to the State Governments are administered by the State Boards of Internal Revenue (SBIRs) of the thirty- six states of the Federation.
Local Governments also administer rates and levies collectable by them through their various councils.
Taxpayers’ obligations include “the duty to work to the best of their ability and to pay the taxes imposed by law in the interest of society” and “always be honest and accurate in their engagements with Federal Inland Revenue Service and State Internal Revenue Services.
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More About Author:
Olatunji is the founder Taxmobile.Online and Managing Partner/CEO of AOA Professional Services. Prior to this,Olatunji worked as Director,Tax & Regulatory Services at Nolands Nigeria Professional Services, Senior Manager -Tax,Regulatory & Advisory Services at Saffron Professional Services.
The information contained herein is general and is not intended, and should not be taken, as legal, accounting or tax advice provided by Taxmobile.Online Inc to the reader. This information remains strictly the opinion of Taxmobile.Online Inc.
The reader also is cautioned that this material may not apply to, or suitable for, the reader’s specific circumstances or needs, and may require consideration of other tax factors if any action is to be contemplated. The reader should contact his or her Tax Advisers before taking any action based on this information.
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