The Federal Inland Revenue Service (FIRS) issued a Public Notice on Tuesday, 17 December 2019 informing taxpayers of its commencement of a nationwide tax enforcement exercise from Wednesday, 18 December 2019. This is aimed at prosecuting tax defaulters and recovering all outstanding tax liabilities arising from self-assessment, tax and transfer pricing audits, tax investigation, demand notices, etc., pursuant to Sections 8, 26(2), 33 and 35 of the FIRS Establishment Act 2007 (FIRSEA).
According to the FIRS, the taxes covered by the exercise include petroleum profits tax, companies income tax, value added tax, withholding tax, tertiary education tax, National Information Technology Development Agency levy, stamp duty and capital gains tax. Consequently, the FIRS advised affected taxpayers to settle their tax liabilities within 7 days of the Public Notice to avoid any disruption to their business.
KPMG Comments on the Public Notice.
Enforcement of payment of outstanding tax liabilities is within the statutory powers of the FIRS. Specifically, Section 8(1)(b) of the FIRSEA empowers the FIRS to “assess, collect, account and enforce payment of taxes as may be due to the government…”. However, before the FIRS sets its enforcement machinery in motion, the established tax liabilities must have become final and conclusive and appropriate demand notice must have been issued to the defaulting taxpayer in accordance with the provisions of Section 33(1) of the FIRSEA. On this basis, it is expected that taxpayers with alleged liabilities arising from pending tax audits and investigations to which they have objected, will not be affected by the exercise.
While the affected taxpayers with outstanding tax liabilities must be mindful of the 7-day deadline and pay up, it is up to them to apply to the FIRS under Section 26(5) of the FIRSEA for extended time to settle their liabilities.
See below a copy of the Public Notice.