FG introduces tax payment in instalments

The Federal Government has proposed introducing a tax payment option that enables individuals to pay their taxes in instalments.

It introduced this in the Nigeria Tax Bill 2024, recently submitted to the National Assembly for consideration and approval. Our correspondent obtained a copy of the draft on Sunday.

This means that each person now has the flexibility to fulfil their tax obligations either by making a single lump sum payment or by spreading the payments out over time and settling before the designated due date for filing.

The government also proposed the creation of a special account by the Accountant-General of the Federation for tax refunds.
Last week, the government instituted a comprehensive set of fresh tax reforms aimed at significantly boosting revenue collection.

The four new bills sent to the two chambers of the National Assembly are aimed at giving legislative frameworks to some proposals of the Presidential Fiscal Policy and Tax Reforms Committee headed by Taiwo Oyedele.

The reforms, designed to enhance the efficiency of collecting direct taxes, along with various levies that are imposed on behalf of the government, will bar the Nigerian Customs Service, Nigerian Ports Authority, and 60 other revenue collection agencies from participating in revenue collection activities, but will lead to the creation of the Nigeria Revenue Service. It also proposed the creation of a tax tribunal and ombudsman.
However, an analysis of the 160-page document showed that the government, as part of efforts to increase collection, hinted at the possibility of tax payment 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 said the amount shall be payable in equal monthly instalments together with a final instalment and shall be in an amount equal to one-twelfth or where the accounting period is less 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,” the draft copy added.

The bill further specified that the final installment of tax shall be due and payable on or before the deadline for filing the self-assessment for that accounting period.
This amount will be the tax assessed for the period minus any amounts already paid under subsections two and three of this section.

Additionally, any instalments estimated to be chargeable will be treated as tax charged and assessed for the purposes of sections 64 and 53 of this Act.

Continuing, the bill explained that taxpayers shall be refunded any overpayment or excess tax due, following an audit by the relevant tax authority.

“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 per cent 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.”