Nigeria's Federal Inland Revenue Service (FIRS), in order to reconcile all taxpayers' Withholding Tax Credit position with the Automated Tax Credit System, has started notifying taxpayers of the need to submit their unutilized withholding tax (WHT) credit notes to the FIRS for confirmation, reconciliation, and approval for usage within 15 days of receiving the notice.

This follows the recently issued internal memo to the FIRS' States Coordinators & Tax Controllers on the need to reconcile WHT credit notes with taxpayers. The FIRS, through the memo, has indicated that for the purpose of updating the online K-Card with the unutilized WHT credit notes, it expects that:

• Individual tax offices forward the memo and WHT usage request sheet to their taxpayers with a 15-day window for action
• Agreed and verified WHT positions should be summarized on journal adjustments vouchers with a sign-off by the FIRS and taxpayer
• WHT credit utilization requests that are more than three-years old must be brought to the attention of the FIRS for auditing
• The circularization and reconciliation program must be completed no later than 30 August 2018
• Closing balances on each taxpayer's updated K-card are to be uploaded on the FIRS' SIGTAS platform no later than 30 September 2018.

According to the memo, taxpayers that fail to present any unused WHT credit notes within the stipulated window forfeit the right to present any such previous WHT credit notes for tax offset in the future.

The FIRS' notice is in line with its drive for the digitization of tax administration in Nigeria, such that taxpayers' agreed WHT credit balances are transferred to their online accounts on the FIRS' portal and can be utilized easily when filing future Companies Income Tax returns. Taxpayers are advised to take advantage of this window to update their WHT position and avoid the loss of their available WHT credits.

It appears that the timeline allocated for the completion of this exercise may be too short for taxpayers. Therefore, taxpayers may consider giving early notices to the FIRS authorities in writing once a situation of non-completion of the reconciliation exercise arises significantly due to the potential gaps between taxpayers' internal WHT positions and the position on the FIRS portal.

———————————————
CONTACTS

For additional information with respect to this Alert, please contact the following:

Ernst & Young Nigeria, Lagos

• Akinbiyi Abudu
  akinbiyi.abudu@ng.ey.com
• Temitope A Samagbeyi
  temitope.samagbeyi@ng.ey.com
• Chinyere Ike
  chinyere.ike@ng.ey.com
• Oluwatumininu Familusi
  oluwatumininu.familusi@ng.ey.com
• Dean Okoduwa
  ehizele.d.okoduwa@ng.ey.com

Ernst & Young Advisory Services (Pty) Ltd., Africa ITS Leader, Johannesburg

• Marius Leivestad
  marius.leivestad@za.ey.com

Ernst & Young LLP (United Kingdom), Pan African Tax Desk, London

• Rendani Neluvhalani
  rendani.mabel.neluvhalani@uk.ey.com
• Byron Thomas
  bthomas4@uk.ey.com

Ernst & Young LLP, Pan African Tax Desk, New York

• Dele A. Olaogun
  dele.olaogun@ey.com

———————————————
ATTACHMENT

PDF version of this Tax Alert