CIT Assessments and Audits: What to Expect and How to Prepare.

What Is Corporation Tax? Definition & Calculation

Introduction:

For Nigerian businesses, complying with the Companies Income Tax (CIT) Act is a fundamental responsibility. As part of the tax administration process, companies may undergo CIT assessments and audits by the Federal Inland Revenue Service (FIRS). These assessments and audits are essential for ensuring tax compliance and accuracy in reporting. In this article, we will shed light on what to expect during CIT assessments and audits and provide guidance on how businesses can adequately prepare for these examinations.

CIT Assessment vs. CIT Audit:

A CIT assessment is a routine review conducted by the FIRS to verify the accuracy and completeness of a company’s tax return. The assessment involves a desk review, where the tax authorities examine the filed tax return and related documentation. If discrepancies or issues are identified, the company may be required to provide additional information or clarify certain transactions.

On the other hand, a CIT audit is a more comprehensive examination that delves deeper into a company’s financial and accounting records. Audits are typically conducted when there are concerns about potential non-compliance or significant tax issues. During a CIT audit, tax officials may visit the company’s premises, conduct interviews with key personnel, and scrutinize the company’s books, records, and supporting documentation.

What to Expect during CIT Assessments and Audits:

a. Request for Information: Both CIT assessments and audits may involve the FIRS requesting additional information or documentation to support the reported figures in the tax return.

b. Interviewing Key Personnel: During a CIT audit, the tax authorities may conduct interviews with key personnel, such as the finance team or tax manager, to gain insights into the company’s tax practices and policies.

c. On-Site Visits: CIT audits often include on-site visits by tax officials to inspect the company’s facilities and verify the accuracy of reported information.

d. Taxpayer Engagement: Throughout the assessment or audit process, the tax authorities may engage with the company to seek clarifications or request further details on specific transactions.

How to Prepare for CIT Assessments and Audits:

a. Maintain Proper Accounting Records: Keeping accurate and up-to-date accounting records is crucial. Companies should ensure that all financial transactions are properly documented and supported by relevant evidence.

b. Comply with Tax Regulations: Strict compliance with tax laws is essential. Businesses should review their tax practices to ensure they align with Nigerian tax regulations.

c. Conduct Internal Reviews: Performing internal tax reviews can help identify potential issues or discrepancies in advance, allowing businesses to address them proactively.

d. Engage Professional Assistance: Partnering with a reputable accounting firm can provide invaluable support during CIT assessments and audits. Professional advisors can help businesses prepare for the reviews and navigate any complexities that may arise.

Conclusion:

CIT assessments and audits are standard processes conducted by the FIRS to ensure tax compliance and accuracy in reporting. Nigerian businesses should be proactive in preparing for these reviews by maintaining proper accounting records, complying with tax regulations, and conducting internal tax reviews. Engaging professional assistance from experienced accounting firms can further enhance the company’s readiness and ability to navigate the assessment and audit process successfully.

For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Sunmola David & CO (Chartered Accountants & Tax Practitioners) at Lagos, Ogun state Nigeria offices, www.sunmoladavid.com. You can also reach us via WhatsApp at +2348038460036.

Loading...