March 24, 2020 /10:47 AM / by KPMG Nigeria / Header Image
The Federal Inland Revenue Service (FIRS) has issued a Public Notice informing taxpayers of automation of the Value Added Tax (VAT) Collection System. The Automated VAT Platform (VATrac) will enable efficient and seamless collection and remittance of VAT on relevant transactions in the wholesale/retail sector and direct audit/reconciliation of all VAT transactions. Affected businesses include:
VATrac will become effective on Wednesday, 1 April 2020 and will be the only approved channel for the submission of VAT returns and payment of VAT due from the affected businesses. The FIRS requires the businesses to contact the nearest tax office for onboarding on VATrac.
Henceforth, the affected businesses are required to include the following information in their transaction or sales receipts:
The introduction of VATrac demonstrates the FIRS' commitment to leverage technology to improve tax administration in Nigeria. It is anticipated that the use of technology to enforce VAT compliance would ultimately result in increased tax revenue by minimizing leakages, widening the tax net and reducing the cost of administration.
Affected businesses with annual taxable supplies above â‚¦25 million are encouraged to liaise with their local FIRS tax office to connect to VATrac and ensure that their transaction receipts contain the required information. The FIRS on its part should put in place effective measures to ensure that the transition to VATrac is seamless, and that technical glitches associated with implementation of a new system are promptly resolved. Equally, considering the tight deadline for implementation, the FIRS must deploy enough resources for nationwide sensitization and integration of relevant taxpayers.
While the FIRS has assured taxpayers that migration to VATrac will improve ease of doing business without disrupting the affected businesses' operations, it must put measures in place to ensure data privacy and security of taxpayers' information that would be disclosed on the platform.