REGISTRATION AND REMITTANCE IN NIGERIA

Value Added Tax (VAT) is a tax on the value added to goods and services at every stage of the production and distribution chain. In Nigeria, VAT is regulated by the Federal Inland Revenue Service (FIRS), which is responsible for collecting the tax on behalf of the government. This article will provide a step-by-step guide on how to pay VAT in Nigeria.

Step 1: Register for VAT
The first step to paying VAT in Nigeria is to register for VAT with the FIRS. Every business that has a turnover of N25 million or more per annum is required to register for VAT. The registration process involves filling out a registration form and providing the necessary documents such as the Certificate of Incorporation, Tax Identification Number (TIN), and bank account details. The registration can be done online via the FIRS portal or in person at any FIRS tax office.

Step 2: Charge VAT on Goods and Services
Once you have registered for VAT, you are required to charge VAT on all goods and services provided by your business. The current VAT rate in Nigeria is 7.5%. This means that for every N100 of goods or services sold, N7.50 is VAT.

Step 3: Keep Accurate Records
It is important to keep accurate records of all sales made and the VAT charged. This includes keeping copies of all invoices, receipts, and payment vouchers. These records will be required when filing VAT returns.

Step 4: File VAT Returns
VAT returns must be filed with the FIRS every month. The returns must be filed on or before the 21st day of the following month. For example, the VAT return for the month of January must be filed on or before the 21st of February. The VAT returns can be filed online via the FIRS portal (Taxpromax).

Step 5: Pay VAT
After filing the VAT return, the VAT due must be paid to the FIRS. This can be done via the Remittal platform or through any commercial bank in Nigeria. The payment should be made on or before the 21st day of the following month.

In conclusion, paying VAT in Nigeria is a legal obligation for every business that meets the turnover threshold. Failure to register and pay VAT can result in penalties (10,000 in the first month, 5,000 subsequent month) failure to file VAT returns can lead to penalties (50,000 for the first month, 25,000 for the subsequent month). Therefore, it is important to comply with the VAT regulations in Nigeria. By following the steps outlined in this article, businesses can fulfill their VAT obligations and avoid any legal issues.

Some of the benefits of VAT include:

Simplicity and Efficiency:
VAT is a simple and efficient way of collecting revenue for governments. It is easier to administer and enforce than other types of taxes like income tax, because businesses are required to collect and remit VAT on behalf of the government.

Fairness:
VAT is considered to be a fair tax because it is a consumption tax. It taxes people based on what they consume, rather than what they earn or own. This means that people who consume more goods and services pay more VAT.

Transparency:
VAT is a transparent tax because it is visible on receipts and invoices. Consumers can see how much tax they are paying, which makes it more difficult for businesses to hide taxes in the price of goods and services.

Revenue generation:
VAT is a significant source of revenue for governments. It is a stable and predictable source of revenue, which helps governments to fund public services and infrastructure.

Encourages compliance:
VAT encourages compliance from businesses because they have a financial incentive to register and comply with tax laws. This helps to reduce tax evasion and increase the tax base.

Overall, VAT is a popular tax system used by many countries because it has numerous benefits, including simplicity, efficiency, fairness, transparency, revenue generation, and compliance.