On 29th March 2021, the FIRS issued a notice to the general public, taxpayers and tax practitioners to cater for the clarification on tax payment in instalments by self-assessment filers as approved by the Finance Act, 2019.
Section 18 of the Finance Act, 2019 which amended Section 77 (5) of the Company Income Tax Act (CITA), cap C21 LFN 2004 states that:
“(5) Every Company shall make payment of tax due on or before the due date of filing in one lump sum or in instalments, provided that: where the taxpayer pays in instalments –
- The taxpayer shall first write, with evidence of payment of the first instalment, and obtain the approval of the service to pay in such number of instalments as may be approved by the service; and
- The final instalment must be paid on or before the due date of filing.”
(5b) Any balance of taxes unpaid as at the due date shall attract interest and penalties as provided in the Act or any other relevant law for failure to pay on the due date in accordance.”
The notice according to the FIRS, elucidates on the section above stating that “Any Company that wishes to pay by instalments must have applied in writing, before the due date of filing, attaching evidence of full payment of Tertiary Education Tax (TEDT) and first instalment of the Companies Income Tax (CIT) due. It is important to note that the last instalment must be paid on or before the due date for filing tax returns, otherwise penalty and interest will be charged after the due date.”
All taxpayers have been charged to ensure compliance with the aforementioned provisions of the Act as failure to comply attracts the measures for the recovery of tax as enshrined in Section 85 (1) of CITA cap C21 LFN 2004 as amended and Section 32 of FIRS Establishment Act (2007), which authorize addition for non-payment and enforcement of payment.
FIRS reaffirms that tax offices will provide adequate assistance to tax payers to satisfy the requirements of the Finance Act, 2019 as regards payments by instalment.
Click here to view the FIRS Publication.