FG Introduces Tax Payment Options

President Bola Tinubu’s government has put forward a proposal to allow individuals the option of paying their taxes in instalments.

This initiative was included in the Nigeria Tax Bill 2024, which has recently been submitted to the National Assembly for review and approval, as obtained by newsmen on Sunday.

Naija News understands that the bill allows individuals to meet their tax obligations either through a single lump sum payment or by distributing the payments over time, ensuring that they are completed before the specified due date for filing.

Additionally, the government has suggested the establishment of a dedicated account by the Accountant-General of the Federation for the purpose of tax refunds.

Last week, the government launched a comprehensive suite of new tax reforms aimed at significantly enhancing revenue collection.

The four new bills presented to both chambers of the National Assembly are intended to provide legislative frameworks for certain proposals put forth by the Presidential Fiscal Policy and Tax Reforms Committee, chaired by Taiwo Oyedele.

These reforms are designed to improve the efficiency of collecting direct taxes and various levies imposed on behalf of the government.

They will prohibit the Nigerian Customs Service, Nigerian Ports Authority, and 60 other revenue collection agencies from engaging in revenue collection activities, leading to the establishment of the Nigeria Revenue Service. Furthermore, the proposal includes the creation of a tax tribunal and an ombudsman.

However, an analysis of the 160-page document indicates that the government, in its efforts to enhance the collection, has suggested the possibility of allowing tax payments to be made in instalments.

Section 48 of the draft bill read, “Subject to section 11 of this Act and without prejudice to any other provision of this Act, every person shall make payment of tax due on or before the due date of filing in one lump sum or instalments, provided that the final instalment shall be paid on or before the due date of filing.”

It stated that payment is required in equal monthly payments, along with a last payment, and would total one-twelfth of the total amount or if the accounting period was shorter than a year.

“Without prejudice to section 16 of this Act, the tax due for any accounting period shall be payable in equal monthly instalments together with a final instalment as provided in subsection four of this section.

“The first monthly payment shall be due and payable not later than the third month of the accounting period and shall be in an amount equal to one-twelfth or where the accounting period is less than a year, in an amount of equal monthly proportions of the amount of tax estimated to be chargeable for such accounting period in accordance with this Act.

“Each of the remainder of monthly payments to be made subsequent to the payment under subsection two of this section shall be due and payable not later than the last day of the month under consideration and in an amount equal to the amount of tax estimated to be chargeable for such period by reference to the latest returns submitted by the company in accordance with section 16 of this Act less so much as has already been paid for such accounting period divided by the number of the monthly payments remaining to be made in respect of such accounting period,” reads the draft copy obtained by The PUNCH.

The bill, Naija News understands, also detailed that the last payment of taxes must be made by the due date for the self-assessment form for that fiscal year.

This sum will represent the tax due for the year minus any payments made under subsections two and three of this legislation.

Moreover, any payments expected to be due will be considered as taxes due and assessed for the functions of sections 64 and 53 of this legislation.

Onward, the bill outlined that individuals will receive a refund for any surplus payment or additional tax owed after a review by the appropriate tax agency.

“The relevant tax authority may make such rules and conditions necessary to facilitate the refund mentioned in subsection one of this section. Any tax refund due shall be made within 90 days of the decision of the relevant tax authority made pursuant to subsection two of this section, with the option of a set-off against any tax liability of the taxpayer.

“For the purpose of tax refund, the Accountant-General of the Federation or of a State shall open a dedicated account for each tax type into which shall be paid money for settling tax refunds. The relevant tax authority shall provide the Accountant-General of the Federation or of a State an estimate of the amount to be set aside for tax refunds.

“The dedicated accounts created under subsection (4) of this section shall be administered by the relevant tax authority and be funded from the respective accounts of Government into which revenue of each tax type is remitted. No claim for refund of tax under this section shall be allowed unless it is made in writing within six years after the end of the year of assessment to which it relates.

“A taxable person who qualifies for VAT refund shall request the Service in the prescribed form. Where a valid request is received from a taxable person, the Service shall not later than 30 days of the receipt of that request, refund the tax to the taxable person or the amount shall be eligible for set-off against any tax liability of the taxpayer,”

On the distribution of value-added tax revenue, it said, “The net revenue accruing by the operation of chapter six of the Nigeria Tax Act shall be distributed as 10 per cent to the Federal Government; 55 percent to the State Governments and the Federal Capital Territory; and 35 per cent to the Local Governments. Provided that 60 per cent of the amount standing to the credit of states and local governments shall be distributed among them on the basis of derivation.”