28,000 companies file VAT returns in July as new technology eases tax payment procedure

A total of 28,000 companies filed their Value Added Tax (VAT) returns to the Federal Inland Revenue Service (FIRS) in July 2023 alone. The Executive Chairman of the FIRS, Mr Muhammad Nami revealed the figure in a recent interview with PREMIUM TIMES.

He said the figure, which is expected to increase in subsequent months, represents an improvement on previous figures filed monthly. He stated that the significant thing is that with the simple pressing of a button, a lot of statistics about tax processes including VAT and other taxes can be ascertained.

Nami credits the successes recorded in the areas of accelerated filing process and increased revenue generation to technology and automation introduced by the FIRS, especially the TaxPro Max platform which enables faster registration, filing and payment of taxes.

According to him, the TaxPro Max portal can be accessed by taxpayers from anywhere including the comfort of their homes and offices. He said it has the following functionalities: Registration, Filing, Assessment, Payment, Issuance of Tax Clearance Certificate and receipts for resident and non-resident taxpayers.

In June 2021, the FIRS introduced its naira-denominated tax administration system, TaxPro Max, as an online platform to ease tax compliance and modernise tax administration in the country. This is in compliance with the provisions of the Finance Act 2020 which empowers the Service to automate tax return filing and payment processes.

As expected, right from the very first year of its deployment, the TaxPro Max system turned out to be a game-changer by contributing to the FIRS’ ability to successively surpass its yearly targets in revenue collections in 2021, 2022 and the first half of 2023 already.

Commenting on why he introduced the TaxPro Max system, Nami stated: “We decided to automate the process when I came in and to automate the process we need in-house technology. We assembled a team of young men and women who are interested in serving Nigeria, who are knowledgeable in ICT in particular software development and they came up with that technology called TaxPro Max.”

VAT is a tax payable on the goods and services consumed by an individual or organisation. It is paid by individuals, private or business organisations, government departments and agencies. The target of VAT is consumption of goods and services and unless an item is specifically exempted by law, the consumer is liable to the tax.

Businesses and organisations are required to register with the FIRS before they can collect the VAT tax on behalf of the Government. Subsequently, they are required to file monthly tax returns to the Government through the FIRS.

Nami explained that the 28,000 filing recorded in July exclude those by companies and organisations dealing on basic food items, baby products, books and educational materials, newspapers and magazines, medical and pharmaceutical products plus services among others which are exempts from VAT payment.

He stated that the figure also represents the filings by companies that recorded the threshold of 25 million naira turnover and above during the month adding that companies with annual turnover that is less than that figure are not required to pay VAT.

Also companies that produce basic products such as food and pharmaceutical products are also exempted. Such companies are only required to file and notify the FIRS about their companies’ performance in other aspects. There are also others that are enjoying tax holidays granted by appropriate authorities.

The FIRS Executive Chairman stated that in 2019, the FIRS as part of the deliberate design of the Federal Government to encourage the growth of small and medium enterprises came up with a law that exempted companies with an annual turnover of N25 million and below from paying VAT. The intention was that since VAT is a progressive tax, it is imperative to give the smaller companies an opportunity to grow before requiring them to pay VAT.

He said that through automation and other systems made possible by the new technology introduced by the FIRS, more companies now file their tax returns easily and voluntarily in many cases.

Since the introduction of the TaxPro Max system, the Nami-led FIRS leadership has been carrying out a series of enlightenment of the public on the process and the increased data requirements to file a complete VAT return.

In April this year, the Service released illustrative videos on YouTube, documented guides and also held a sensitisation event targeted at various stakeholders in the tax revenue sector.

Some aspects of the new technological changes have firmed up while others are in their pilot phases but the total commitment of the management towards their full implementation and adoption by taxpayers is quite evident.