The Federal Inland Revenue Service Begins Probe of ‘Big Companies’

The Federal Inland Revenue Service (FIRS) has launched a new assessment regime to determine the tax ranges companies before they file returns.

The agency has been authorised to plug into big companies’ databases to assess performance.

The tech-driven onsite assessment involves the attachment of FIRS software to the companies’ databases.

This allows FIRS to ascertain the right value of taxes to collect from such institutions before tax fillings.

Section 25 of the Federal Inland Revenue Service (Establishment) Act-as amended under the Finance Act, 2021-gives powers to the Service to deploy proprietary or third party technology for tax administration. This includes tax assessment and information gathering from taxpayers.

Consequently, where the Service desires for the purpose of assessment access to any taxpayer’s database, it would give a 30 days’ notice to the taxpayer requesting that such access be granted.

Failure to grant access is considered an offence under the law and subject to an administrative penalty of N25,000 for each day the failure continues.

The new assessment regime is a major highlight of an aggressive push for efficient tax assessment and collection as Nigeria races to rev up its tax income.

The 2022 budget indicates a deficit of 37 per cent; with projected non-oil revenue of N2.1 trillion and non-oil taxes such as company income tax and value-added tax (VAT) of N1.22 trillion.

Partner, Tax, Regulatory and People Services, KPMG Nigeria, Olufemi Babem, confirms the new FIRS initiative.

The law requires companies to register for tax and file their audited accounts and tax computations with the FIRS within six months of their financial year-end on a self-assessment basis or 18 months after incorporation.

Babem said the implementation of the new tax plan is already taking place in key sectors – banking, insurance, manufacturing, housing and oil and gas sectors among others as the government pushes hard to raise its revenues and tax to Gross Domestic Product (GDP) ratio to new heights.

He added that the implementation of the Finance Act, 2021 has made the new policy plan actionable by giving more powers to FIRS to collect taxes for the nation. He further explained that having access to companies’ tax data will ensure accurate taxing of such institutions.