Case for Prompt Rendering of VAT Returns at Due Dates – Finance Act 2019
The Finance Bill signed into an Act by President Muhammadu Buhari on Monday 13 January 2020, made sweeping changes to the nation’s tax laws.
With particular reference to value added tax, aside the known increase in VAT rate from 5% to 7.5%, there are other changes significant enough that could affect your business operations if adequate attention is not devoted. One of these areas is the penalty for the late filing of VAT returns.
Section 44 of the Finance Act amended section 35 of the Value Added Tax Act, CAP V1, LFN 2004 to the effect that where a taxpayer fails to submit (VAT) returns to the Service, a fine of N50,000 in the month of default and N25,000 for every month in which the default continues would be levied.
Put differently, under the current amendment, where VAT returns are not rendered for transactions consummated from 01 Feb 2020 to 31 Dec. 2020, the accrued penalties for the period would amount to N1,625,000 as against N275,000 it would have been under the old provision.
It is noteworthy that the Minister of Finance, Budget and National Planning, Zainab Ahmed announced on Thursday, 16 January 2020, that the new VAT provisions would take effect from Saturday, 01 February 2020 after all the necessary administrative procedures have been completed.
It is infinitely important that compliance risk managers and/or business owners pay serious attention to this. It is also advised that the services of a licensed tax consultant are engaged in this regard.
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