President Bola Tinubu’s government has proposed allowing individuals to pay their taxes in instalments.
This initiative is part of the Nigeria Tax Bill 2024, recently submitted to the National Assembly for review and approval, as reported by newsmen on Sunday.
Naija News reports that the bill permits individuals to fulfil their tax obligations either through a lump sum payment or by spreading payments over time, ensuring completion before the filing deadline.
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 introduced in the National Assembly aim to establish legislative frameworks for proposals from the Presidential Fiscal Policy and Tax Reforms Committee, led by Taiwo Oyedele.
These reforms are designed to improve the efficiency of collecting direct taxes and various levies imposed on behalf of the government.
The proposal will prohibit the Nigerian Customs Service, Nigerian Ports Authority, and 60 other revenue collection agencies from collecting revenue, leading to the establishment of the Nigeria Revenue Service. It also 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 states, “Subject to section 11 of this Act and without prejudice to any other provisions, every person must pay the due tax in full or in instalments, with the final instalment due by the filing deadline.”
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 is due by the third month of the accounting period, amounting to one-twelfth of the estimated tax for that period, or, if the period is shorter than a year, in equal monthly proportions.
“Subsequent monthly payments shall be due by the last day of the month and shall equal the estimated tax charge for the period, based on the latest returns submitted by the company per section 16 of this Act, minus any amounts already paid for that accounting period, divided by the remaining number of monthly payments for that period,” states the draft 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.
The bill states that individuals will receive a refund for any excess payment or additional tax owed following a review by the appropriate tax agency.
“The tax authority may establish necessary rules and conditions to facilitate the refunds mentioned in subsection one. Any due tax refund must be processed within 90 days of the relevant tax authority’s decision made under subsection two, with the option for a set-off against the taxpayer’s tax liability.
To manage tax refunds, the Accountant-General of the Federation or a State will open dedicated accounts for each tax type to receive funds for refunds. The relevant tax authority will provide an estimate of the amount to reserve for these refunds.
The dedicated accounts established per subsection (4) will be managed by the relevant tax authority and funded from government accounts that receive revenue for each tax type. Refund claims must be filed in writing within six years following the assessment year they pertain to.
Taxpayers eligible for VAT refunds must submit a request in the prescribed format. Upon receiving a valid request, the Service will refund the tax or apply it as a set-off against any tax liability within 30 days.
Regarding the distribution of value-added tax revenue, “The net revenue from chapter six of the Nigeria Tax Act will be allocated as follows: 10 percent to the Federal Government, 55 percent to State Governments and the Federal Capital Territory, and 35 percent to Local Governments, with 60 percent of the amount allocated to states and local governments distributed based on derivation.”
