This new provision offers individuals the option to meet their tax obligations either through a single lump sum payment or by distributing the payments over time, ensuring that all dues are settled before the specified filing deadline.
Additionally, the government has suggested the establishment of a dedicated account by the Accountant-General of the Federation to facilitate tax refunds.
Last week, a comprehensive set of new tax reforms was introduced, aimed at significantly enhancing revenue collection. The four new bills presented to both chambers of the National Assembly are intended to provide a legislative framework for several proposals from the Presidential Fiscal Policy and Tax Reforms Committee, chaired by Taiwo Oyedele.
These reforms are designed to improve the efficiency of direct tax collection and various levies imposed on behalf of the government. They will restrict 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. The proposal also includes the creation of a tax tribunal and an ombudsman.
However, an analysis of the 160-page document revealed that the government is considering the option of tax payment in instalments as part of its strategy to enhance collection.
Section 48 of the draft bill states, “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.”
The document states that the total amount owed will be paid in equal monthly installments, along with a final payment, which will be calculated as one-twelfth of the total amount, or proportionally if the accounting period is shorter than a year.
"Subject to section 16 of this Act, the tax obligation for any accounting period must be settled in equal monthly installments, along with a final payment as outlined in subsection four of this section.
"The initial monthly payment is required to be made no later than the third month of the accounting period and will be equivalent to one-twelfth of the estimated tax liability for that period, or, if the accounting period is less than a year, will be divided into equal monthly amounts based on the estimated tax due as per this Act.
"Subsequent monthly payments, following the initial payment described in subsection two, must be made by the last day of each month in question. These payments will be calculated based on the estimated tax liability for that period, as indicated by the most recent returns submitted by the company in accordance with section 16 of this Act, minus any amounts already paid for that accounting period, divided by the number of remaining monthly payments for that period," the draft copy further elaborated.
The bill also clarified that the final tax installment is due on or before the deadline for submitting the self-assessment for that accounting period. This final amount will be the total tax assessed for the period, less any payments made under subsections two and three.
Moreover, any estimated installments that are deemed chargeable will be considered as tax assessed for the purposes of sections 64 and 53 of this Act.
Finally, the bill indicated that taxpayers will receive refunds for any overpayments or excess tax liabilities following an audit conducted by the appropriate tax authority.
The appropriate tax authority is empowered to establish rules and conditions necessary for facilitating the refund referenced in subsection one of this section. Any tax refund owed must be processed within 90 days following the decision made by the relevant tax authority as outlined in subsection two of this section, with the possibility of offsetting against any tax obligations of the taxpayer.
To manage tax refunds, the Accountant-General of the Federation or of a State is required to create a dedicated account for each type of tax, into which funds for tax refunds will be deposited. The relevant tax authority must provide the Accountant-General with an estimate of the funds needed for these refunds.
The dedicated accounts established under subsection (4) will be managed by the relevant tax authority and will be funded from the respective government accounts where revenue from each tax type is deposited. No tax refund claims under this section will be accepted unless submitted in writing within six years following the conclusion of the assessment year in question.
A taxable individual eligible for a VAT refund must submit a request to the Service using the designated form. Upon receiving a valid request, the Service is obligated to process the refund to the taxable individual within 30 days, or the amount may be applied as a set-off against any tax liabilities of the taxpayer.
Regarding the distribution of value-added tax revenue, it is stated that the net revenue generated under chapter six of the Nigeria Tax Act will be allocated as follows: 10 percent to the Federal Government, 55 percent to the State Governments and the Federal Capital Territory, and 35 percent to the Local Governments, with the stipulation that 60 percent of the funds allocated to states and local governments will be distributed based on derivation.