By Adedapo Adesanya
Top telecommunications companies, MTN Nigeria and Airtel Nigeria, have been appointed as the collector of Value Added Tax (TAX) along with deposit money banks (DMBs) in Nigeria.
The Federal Inland Revenue Service (FIRS) confirmed this development in a statement signed on Monday, November 7 by its Executive Chairman, Mr Muhammad Nami.
The companies now have the authority to withhold VAT charged on all taxable supplies made to them, and would be required to remit the fees to the agency.
Before now, only oil and gas firms and government agencies were allowed to deduct VAT from invoices from suppliers.
“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,” the statement said.
The FIRS noted that these companies are expected to remit the withheld tax on or before the 21st day of the month immediately following the month in the format prescribed by the service.
“The companies shall remit the tax withheld or collected, in the currency of transaction, to the service on or before the 21st day of the month immediately following the month the tax was withheld or collected.
“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,” it said.
The notice further explained the options that were 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,
“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,” the notice explained.
It further noted that the agency has instituted adequate measures to ensure prompt payment of refundable input tax under this arrangement, stating that input tax claims, which include refunds, are subject to the limitations imposed by Section 17(2)(a) of the VAT Act.
