Analysts at KPMG have called on the Federal Inland Revenue Service (FIRS) to grant as long as three months or more tax filing extension on Companies Income Tax (CIT) returns nationwide.
The analysts in a research report sourced by Daily Trust stated that: “ Instead of the one-month extension, We expected the revenue collector to grant as long as three months or more.
“For instance, Bulgaria granted companies a 3-month extension of the timeline to file their tax returns in addition to extending the timeline for payment of taxes”, the professional firm added.
While commending the Federal Government (FG) for the steps taken so far to combat the pandemic, it noted that government needed to do more to ameliorate the impact of the COVID-19 pandemic on Nigerians and businesses.
The analysts explained that the adequacy of the tax measures needed to be reviewed in light of the reality of the impact of COVID-19 on production, supply chains, sales, profitability and cash flow for businesses.
The report suggests that the measures were not drawn based on the reality of the extent the coronavirus had eaten deep into the finances of businesses and Nigerians
“The state tax authorities need to follow the example of the FIRS to announce their palliative measures on employers’ monthly pay-as-you-earn tax and withholding tax compliance obligations, especially in the midst of business closures, layoffs and delays by, or inability of, employers to meet up with the monthly obligations to their employees”, it stated
While lauding the House of Representatives’ (HOR) Emergency Economic Stimulus Bill initiative, the analysts picked holes in the concept and recommended that the bill needs to be refined in some respects to clarify whether the Government intends to give cash refunds to eligible companies or whether the relief will be taken as a deduction against the income tax payable under the Companies Income Tax Act.
Given the two options above, KPMG experts prefer the later, as they projected that it would be easier and cheaper to administer than a cash refund.
It would be recalled that as part of its response to the Covid-19 crisis, the FIRS on 23 March 2020 announced certain measures and palliatives which include extension of time for filing VAT and Withholding Tax (WHT from 21st to the last working day of the month, following the month of deduction.
It also announced the extension of the due date for filing Companies Income Tax returns by one month and further advised that taxpayers may file returns using unaudited accounts but must subsequently submit audited accounts within two months after the revised due date of filing.