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Tax Platform: Frequently asked questions about self-assessment

Why is the Service migrating from government assessment to self-assessment?
The Service is not migrating but strengthening self-assessment because the Service did not get the policy right at the beginning.

What is the difference between Administrative Assessment and Best of Judgement?
Administrative Assessment means an assessment raised by a relevant tax authority where a taxpayer has failed to file returns and pay taxes due on or before the due date or where there is an understatement of tax in the returns filed. Best of Judgement (BOJ) is an administrative assessment, however, in issuing it, it shall be based on spot audit, third party information to identify material fact upon which the assessment will be raised.

Is Spot Audit provided for in the tax law?
Spot Audit and third party information is provided for by Section 26 of the FIRS (Establishment) Act.

What is the difference between Administrative Assessment and Government Assessment?
There is no difference between Administrative Assessment and Government Assessment. They are terminologies used interchangeably as assessment raised on behalf of government by the relevant tax authority.

Will an objection arise under a self-assessment system?
Ordinarily, under a self-assessment system, the taxpayer may not object against his own assessment, however, he may object against an assessment raised administratively.

How does an Assessment Program differ from a Filing Compliance Program?
Assessment program is used to raise assessment for taxpayers who fail to file on due date. However, Filing Compliance Program is used to enforce compliance to ensure all taxpayers file their tax returns and make payment of tax due on or before due date.

What should be the relationship between RPP/Audit/RAU?
There must be collaboration between them and the chain must not be broken. RPP receives returns; carries out arithmetic checks and passes them to Tax Audit for RAU- a subunit of Tax Audit to carry out analysis for case selection.

What are the KPIs for RAU?
The Key Performance Indicators shall be set in line with the Risk Assessment benchmarks and agreed from time to time. The time spent on risk profiling of taxpayer data; the report generated on weekly basis not later 2-day after a week; the tax yield of the report.

What should you do when you notice the basis period is not correct?
It is RPP’s responsibility to correct the basis period, re-compute and notify the taxpayer for payment.

Should all tax returns be risk profiled?
Yes, all tax returns should automatically be risk profiled. After data entry, the taxpayer file is forwarded from RPPU to the Head of Audit for the Selection Criteria Analysis.

Should RPPU be communicating directly with taxpayers?
RPPU can communicate directly to/with taxpayer by notifying him when an error is observed during the review of returns.

What action is to be taken when tax returns are not submitted on due date?
FDAEU should visit the taxpayer immediately with a demand for the returns and inform the taxpayer of the consequences of having failed to comply with the due date. Administrative assessment procedure will commence after the visit.

What happens to the seized books of a Taxpayer who was distraint; at what point do you return the books that were seized?
Make copies of the seized documents and ensure it is endorsed by the taxpayer then return the books immediately in line with the provisions of Section 26 and 30(2) of FIRS (Establishment) Act, No 13 2007.

When an Additional Assessment is raised, should it be back-dated to the due date of filing/payment?
Yes, it should be effective from the time the payment was due.

The penalty for late returns and penalty for late payment do not appear to be equitable. Could this be reviewed?
A recommendation has been made for the review to make it a percentage of tax due.

How do you encourage taxpayers to file in their appropriate Jurisdiction?
If the taxpayer has previously filed in a wrong jurisdiction, the taxpayer’s file should be moved to the jurisdiction within which his address falls. Then the taxpayer should be advised accordingly.

What is the working relationship between Filing Debt Arrears Enforcement Unit (FDAEU) and the Returns Payment Processing Unit (RPPU)?
RPPU conducts arithmetic checks of a tax return, captures data and refers a list of non-compliant taxpayers to FDAEU for further actions including a visit to the taxpayer to find out why he failed to file and remind him of the consequences of late and non-filing.

When is a Tax Clearance Certificate issued to a taxpayer?
A Tax Clearance Certificate is issued only when tax liabilities including penalty and interest for the relevant assessment years are paid.

The focus of Self-Assessment appears to be on only CIT. Is VAT not part of the Self-Assessment Process?
Self-Assessment is a regime and covers all tax types

After the risk assessments of returns have been done, are all the returns then passed to the Audit Unit?
Yes, the Audit works on the result of the risk analysis to draw up its audit program for further action. In any case, RAU is a sub-unit of Audit.

Presently there are no Audit Units in some ITOs what will happen to the audit functions in these offices?
All offices are expected to have Audit Units by the time Self-Assessment is fully implemented. However, where there are no Audit Unit, the Regional Audit shall perform the audit.

What is the process for approving a request for instalment payment of tax?
Where a taxpayer intends to conclude instalment payments not later than due date of filing, the taxpayer is required to notify the tax office of his intention. However, where a taxpayer intends to conclude instalment payments beyond the due date of filing, he shall request for approval. In any of the cases, the taxpayer is expected to commence instalment payments before due date such that the final payment is made not later than due date.

What are the conditions for granting extension of time for filing returns?
Written application to be submitted before due date of filing returns and to show good cause for taxpayers inability to file by the due date. If the Board is satisfied with the cause, it may grant approval under the following conditions; upon sudden death of any Principal Officer of the Company; and Where the Company experienced Natural disaster. The approval to extend the time within which to file returns will not alter the time within which payment of tax is to be made.

The law allows two months grace from due date of filing, does this now mean the grace period is eight months?
With respect to Companies Income Tax, a taxpayer is required to file tax returns and make payment of tax due not later than 6 months after the accounting year end. However, he has the option to make instalment payments of tax due in a manner that the final instalment is paid not later than 2 months after due date.

What about the incentive for self-assessment filing, will taxpayers who file still enjoy this incentive?
The incentive for self-assessment filing that existed up to 2007 was abolished by Companies Income Tax (Amendment) Act 2007.

Considering the non-compliant culture of Nigerians, do you think that self assessment as a means to achieving voluntary compliance will work in Nigeria? Put in another way; are we ripe for voluntary compliance?
The self-assessment tax regime is concerned with the provision of proper enablement for taxpayers and enforcement actions that will ensure compliance. My understanding is that the first instalment of tax payable should be paid on due date and the remaining maximum of five (5) instalments paid after due date but not later than November 30, 2011.

In accordance with the self-assessment regulations, instalment payments may commence before due date of filing provided the final payment is made not later than due date. In addition, the regulation only provided for three (3) instalments. Note that the Companies Income Tax Act does not say six (6) instalment payments must be granted.

When was the Taxpayers Service Policies, Processes and Programmes Department (TSPPPD) created and what is the purpose of creating the department at the Headquarters when Taxpayers Service Unit already exists in all the Integrated Tax Offices?

TSPPPD was created in April, 2011. TSPPPD at the Headquarters is responsible for generating procedures for delivering uniform taxpayer service, formulating the annual operating plan and providing headquarters support to ensure taxpayer service is effectively carried out in order to target compliance gap.


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