The Federal Government has introduced a new tax payment option that allows individuals to pay their taxes in installments.
This proposal is included in the Nigeria Tax Bill 2024, which was recently submitted to the National Assembly for consideration and approval.
Under this new provision, taxpayers will have the flexibility to meet their tax obligations either through a single lump sum payment or by spreading payments over time, ensuring that they settle their dues before the designated filing deadline.
This initiative aims to ease the financial burden on taxpayers and promote compliance.
The government has also proposed the establishment of a special account by the Accountant-General of the Federation specifically for tax refunds.
Last week, the government introduced a comprehensive suite of tax reforms designed to enhance revenue collection significantly.
The four new bills submitted to both chambers of the National Assembly aim to establish legislative frameworks for various proposals put forward by the Presidential Fiscal Policy and Tax Reforms Committee, chaired by Taiwo Oyedele.
These reforms are part of a broader strategy to improve the efficiency and effectiveness of the country’s tax system.
However, an analysis of the 160-page document showed that the government, as part of efforts to increase collection, hinted at the possibility of tax payment in instalments.
Section 48 of the draft bill read, “Subject to section 11 of this Act and without prejudice to any other provision of this Act, every person shall make payment of tax due on or before the due date of filing in one lump sum or instalments, provided that the final instalment shall be paid on or before the due date of filing.”
The proposal states that the tax amount shall be payable in equal monthly installments, along with a final installment. This final payment will be equal to one-twelfth of the total amount, or adjusted accordingly if the accounting period is less 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 shall be due and payable not later than the third month of the accounting period and shall be in an amount equal to one-twelfth or where the accounting period is less than a year, in an amount of equal monthly proportions of the amount of tax estimated to be chargeable for such accounting period in accordance with this Act.
“Each of the remainder of monthly payments to be made subsequent to the payment under subsection two of this section shall be due and payable not later than the last day of the month under consideration; and in an amount equal to the amount of tax estimated to be chargeable for such period by reference to the latest returns submitted by the company in accordance with section 16 of this Act less so much as has already been paid for such accounting period divided by the number of the monthly payments remaining to be made in respect of such accounting period,” the draft copy added.
The bill further stipulates that the final installment of tax must be paid on or before the deadline for filing the self-assessment for that accounting period.
The bill specifies that the amount due will be the tax assessed for the period, minus any payments made under the relevant subsections.
Additionally, any estimated installments will be treated as tax charged and assessed in accordance with sections 64 and 53 of the Act.
Furthermore, it outlines that taxpayers will be refunded any overpayment or excess tax following an audit conducted by the appropriate tax authority.
“The relevant tax authority may make such rules and conditions necessary to facilitate the refund mentioned in subsection one of this section. Any tax refund due shall be made within 90 days of the decision of the relevant tax authority made pursuant to subsection two of this section, with the option of a set-off against any tax liability of the taxpayer.
“For the purpose of tax refund, the Accountant-General of the Federation or of a State shall open a dedicated account for each tax type into which shall be paid money for settling tax refunds. The relevant tax authority shall provide the Accountant-General of the Federation or of a State an estimate of the amount to be set aside for tax refunds.
“The dedicated accounts created under subsection (4) of this section shall be administered by the relevant tax authority and be funded from the respective accounts of Government into which revenue of each tax-type is remitted. No claim for refund of tax under this section shall be allowed unless it is made in writing within six years after the end of the year of assessment to which it relates.
“A taxable person who qualifies for VAT refund shall request the Service in the prescribed form. Where a valid request is received from a taxable person, the Service shall not later than 30 days of the receipt of that request, refund the tax to the taxable person or the amount shall be eligible for set-off against any tax liability of the taxpayer.”
