Business & Economy - News - January 20, 2022

FIRS to issue guidelines on VAT collect on digital supply of services, intangibles

By Bassey Udo

The Federal Inland Revenue Service (FIRS) to issue guidelines on the Simplified Compliance Regime on value added tax (VAT) for non-Resident Suppliers.

The guidelines, which are in line with the amendment of Section 10 of the VAT Act by the recently approved Finance Act 2021, would also cover the collection of VAT on digital supply of services and intangibles in the country.

FIRS Chairman, Muhammad Nami, who disclosed this at the Pedabo 2022 Annual Public Private Sector Engagement in Abuja on Tuesday said the Service would ensure full automation of all its tax administration processes to block revenue leakages, revolutionize revenue generation and collection.

Calling on Nigerians to cooperate with the agency to achieve this objective, Nami said the full automation of the Service’s operations would ensure priority attention was given to taxation of digital economy going forward.

Nami said the amendment of Section 25 of the FIRS (Establishment) Act in the 2021 Finance Act, empowered the FIRS to sanction any person who failed to grant the Service access to information technology systems to connect to its automated tax administration solution.

“We will seek to achieve 100% automation of all our tax administration processes, which will block revenue leakages and revolutionize revenue generation in the country.

“We expect the full cooperation of Nigerians in this regard, considering that by the amendment to Section 25 of the Federal Inland Revenue Service (Establishment) Act in the 2021 Finance Act (through Section 18 of the 2021 Finance Act), any person who fails to grant the Service access to its information technology systems to connect to its automated tax administration solution is liable to penalties under the law,” he said.

Earlier, the FIRS Chairman said in the year 2021, the Service leveraged on the amendments to its Establishment Act to embark on “a major infrastructure overhaul, focusing on the deployment of technology for the automation of its processes and procedures.”

This exercise, he said, resulted in the deployment by the Service of its home-grown integrated tax administration system, called TaxPro Max.

In 2022, he said the Service would give priority to the collection of taxes from the digital economy, by deploying technological tools in assessing entities that fall within the Significant Economic Presence (SEP) threshold and relevant turnover generated from Nigeria.

“With the amendment of Section 10 of the VAT Act by the Finance Act 2021, we will implement the published Guidelines on the Simplified Compliance Regime on VAT for Non-Resident Suppliers, to collect VAT on digital supply of services and intangibles to Nigeria.

“The Service has deployed a digital service interface, the Digital Economic Compliance (DEC) Tool, to facilitate the implementation of the Regime. The implementation of the DEC Tools will also assist the Service in determining entities that fall within the SEP threshold and relevant turnover generated from Nigeria. This tool will go live shortly.”

Also, he said the Service would focus on compliance and enforcement strategies in 2022, by leveraging on intelligence, strategic data mining and analysis, to enhance audit and investigation functions and implement the penalty regimes in accordance with the laws.

The Service, he said, was poised to ensuring the prosecution of recalcitrant taxpayers during the year and beyond.

He called on taxpayers, tax consultants, tax collection agents and other stakeholders in the tax system to partner with the FIRS in 2022 to make taxation and tax revenue collection a pivot for economic growth and national development, stating that “no society can grow without its citizens paying their taxes.”

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