FIRS appoints MTN, Airtel, commercial banks VAT collectors
By Chisom Nwatu
Telecommunications giants, MTN and Airtel, as well as commercial banks/deposit money banks in Nigeria have been appointed by the Federal Inland Revenue Service (FIRS) to withhold Value Added Tax (VAT) charged on all taxable supplies made to them, and remit same to the agency.
FIRS made this known in a statement issued by Johannes Oluwatobi Wojuola, special assistant on media and communication to the agency’s executive chairman.
Similarly, a public notice issued on November 7, 2022 and signed by Muhammad Nami, executive chairman of the service, said the new order will take effect from 1 January 2023.
The notice explained the role of the companies as well as the obligations of their suppliers with regards to the collection of VAT.
“This Notice is given to all persons carrying on trade, profession or business of any kind, tax practitioners and the general public that, with effect from 1st January, 2023; in line with the provisions of Section 14(3) of the Value Added Tax Act Cap. V1 LFN 2004 (as amended), the following companies are appointed to withhold or collect VAT charged on all taxable supplies made to them: MTN; Airtel; and all money deposit banks—as defined by the CBN Guidelines,” Nami said in the notice.
Speaking on remittance, the FIRS chief noted that these companies are expected to remit the tax they would withhold on or before the 21st day of the month immediately following the month the tax was withheld, in the format prescribed by the Service.
“The tax withheld or collected under this notice shall be remitted in the format prescribed by the Service but separately from VAT due on the companies’ taxable supplies,” he said.
On claiming back VAT, Nami explained the options that are available to suppliers of these companies whose output tax is withheld.
“A supplier whose output tax is withheld, as provided in this notice, may deduct the input tax paid on the goods purchased or imported to make the taxable supply from the output tax collected on other taxable supplies,” the FIRS boss said.
“And where the input tax paid to make the supply is not fully recovered from the output tax on other taxable supplies, the balance is refundable to the supplier; provided that a supplier who is entitled to a refund may utilise the amount refundable to offset future VAT liability or request for a cash pay-out,” he explained.
Also, the notice said the Service has instituted adequate measures to ensure prompt payment of refundable input tax under this arrangement, while also stating that input tax claims, which include refunds, are subject to the limitations imposed by Section 17(2)(a) of the VAT Act.
VAT is a consumption tax on goods and services that is levied at each stage of the supply chain where value is added, from initial production to the point of sale.