Tax Accounting and System Adjustments, Pursuant to the Finance Act, 2019: You can win this!

Published On - March 12, 2020

Vi-M Professional Solutions Tax Accounting, Tax Tips & Quiz, Vi-M Finance Act Series

It is no longer news that the provisions of the Finance Act, 2019 has changed the tax laws, practice, computations and accounting. 
 
Every business operating above the N25million tax payment threshold therefore needs to review its operations side by side the changes in the Finance Act, and then make attendant changes to its tax compliance processes, existing tax templates, tax accounting processes and accounting systems/ software settings.
 
Such reviews would be necessary in consideration of the following, amongst others:
 

  1. Change of Value Added Tax (VAT) rate to 7.5%.
  2. Change of VAT payment basis from accrual basis to cash basis.
  3. Self-accounting and remittance of VAT on supplies from non-residents (applicable prior the Finance Act, 2019).
  4. New requirement for self-accounting and remittance of VAT on local supplies from small businesses below the N25m VAT payment threshold.
  5. New requirement for self-accounting and remittance of VAT on all other taxable local supplies on which VAT is not charged.
  6. Withholding tax deductions and accounting, for respective supplies from ‘incorporated’ and ‘un-incorporated’ small businesses below the tax payment threshold (the Federal Inland Revenue Service’ view versus the law).
  7. Withholding tax deductions and accounting for transactions with non-resident companies.
  8. Accounting for incomes and profits that are exempt from VAT and Companies Income Tax (CIT), respectively, pursuant to the Finance Act, 2019.
  9. Accounting for staff costs, pensions, retirement benefits and employee taxes.
  10. Accounting for deferred tax, what now constitutes temporary differences or not, tax disclosures in the financial statements and effective tax rate reconciliations.

 To receive support in navigating the above changes, you may sign up to our support services in any of the following areas:

  1. Accounting system or ERP adjustments to cater for necessary accounting changes (including set up of appropriate account heads/ ledgers and training of responsible staff on how to process these transactions going forward).
  2. Reviews/ provision of tax computations and tax disclosures templates for your business.
  3. Detailed Tax Advisory Opinion document on how the changes in the Finance Act will impact your business specifically, after critical reviews of your legal and operational structure.
  4. One-on-one Finance Act advisory session
  5. Personal Income Tax and Payroll Management Training
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