10 Frequently Asked Questions About Value Added Tax (VAT)

10 Frequently Asked Questions About Value Added Tax (VAT)

Question 1: What is value added tax?

Answer: Value added tax (VAT) is a sax levied on consumption of goods and services.

Question 2: On what types of goods and services do you pay VAT?

Answer: The VAT act CAP.VI LFN 2014 requires that you pay VAT on all goods manufactured/assembled in or imported into Nigeria, and all services rendered by any person in Nigeria except those specifically exempted under the law as follows: basic (raw) food items, baby products, medical services and services rendered by community banks etc.

Question 3: What is the VAT rate?

Answer: 5 Per cent.

Question 4: What is the due date of filing VAT returns?

Answer: On or before the 21st day of the month following the month of transaction.

Question 5: What are the relevant documents required for filing VAT returns?

Answer: (i) Evidence of payment such as bank teller, e-ticket, e-acknowledgement etc. From an FIRS designated revenue collecting banks

(ii) Completed VAT returns form 002 (for individuals, enterprises and companies)

(iii) Schedule of VAT collected indicating the: name, taxpayer identification number (TIN) of company or individual on whose transaction the VAT was charged mid the related amount.

Question 6: Who should register for VAT?

Answer: Both individual and corporate bodies so long as they are trading in goods and services.

Question 7: How do you register for VAT collection?

Answer: Once you register with the FIRS by completing taxpayer registration input form, submit copies of prescribed documents and obtain taxpayer identification number (TIN), you are automatically registered and authorised to collect VAT.

Question 8: When should a taxable person register for VAT?

Answer: All taxable persons are expected to register for VAT immediately they are registered with corporate affairs commission (AC) or commencement of business.

Question 9: What are the penalties for:

(i) Non – registration for VAT?

Answer: A penalty of N10,000 for the first month in which the failure occurs and N5,000 for each subsequent month. If this persists, the business premises will be sealed up after a considered reasonable period.

(ii) Non – remittance for VAT?

Answer: A penalty of a sum equal to 5% per annum plus interest at a commercial rate payable within 30 days of notification by the tax authority.

Question 10: How do you pay VAT?

Answer: VAT is paid through all FIRS designated revenue collecting banks into the VAT pool account.

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