Wednesday, June 16, 2021 / 06:20 PM/ by Deloitte /
Header Image Credit: Yeo and Yeo
The Federal Inland Revenue Service (FIRS), through some of its tax offices, has requested that taxpayers who have unutilised Withholding Tax (WHT) credit notes dating prior to , should submit these for validation latest . According to FIRS, failure to validate the WHT credit notes by this deadline will lead to permanent forfeiture of the tax credits.
FIRS also stated that once the window for validating WHT credit notes closes on , settlement of Companies Income Tax (CIT) liabilities and approvals for WHT refunds will be based on WHT credits that have been recognized in the taxpayer's account. Specifically, from , WHT credit notes that have not been validated can neither be used to defray CIT liabilities nor recovered as tax refunds.
The process of WHT credit note validation is a usual practice of the FIRS, however imposing a deadline, failure of which may mean forfeiture of a valid WHT credit, has not considered the peculiarities around WHT credit note issuance and claim by taxpayers. For instance, taxpayers may have suffered the deduction at source but are yet to be given WHT credit notes because the collection agents may either have not remitted the amount deducted or the FIRS is yet to issue the WHT credit notes accordingly. Therefore, to provide a short window for validating WHT credit notes that may not have been collected by taxpayers would be inconsistent with the tenets of the tax system.
Additionally, the proposed plan raises practical questions such as:
Similar to the WHT credit notes validation, taxpayers may need to validate their balance of unutilized capital allowance and tax losses following . Taxpayers whose unutilised capital allowance and tax losses have been incorrectly stated on TaxProMax have been advised to approach FIRS' tax offices to reconcile and update these records.
While we urge the FIRS to consider extending the timeline and/or modalities for validating the WHT credit notes and/or providing feasible options for taxpayers to obtain WHT credit notes that have not been issued, we encourage taxpayers to take urgent steps to reconcile their WHT credit position(s) and/or seek specific interventions for quick issuance of WHT credit notes.
Kindly share and stay connected with us on our platforms HERE
You can also subscribe to our NEWSLETTER