The Finance Act of 2020 brought amendments to the Value Added Tax Act (VATA), specifically focusing on non-resident suppliers (NRS) making taxable supplies to Nigeria. Section 10 of VATA mandates registration and Tax Identification Number (TIN) acquisition for non-resident suppliers. The Federal Inland Revenue Service (FIRS) has issued comprehensive guidelines, effective from January 1, 2022, for services and January 1, 2024, for goods, to streamline VAT compliance for NRS.
Key Provisions and Procedures
- VAT Registration Requirements:
- NRS must register with FIRS through the provided link on the FIRS website. Existing VAT-registered NRS in Nigeria should migrate to the Simplified Compliance Regime using the same link.
- Registration Procedure for NRS:
- NRS should register within 12 months before or after making supplies exceeding $25,000 via digital means to Nigeria.
- Registration involves providing detailed information such as business name, nature of supplies, contact person details, and tax identification numbers.
- Taxable Supplies in Nigeria:
- Digital services, online platforms, and certain intangibles are taxable.
- Exemptions include specific professional services, broadcasting, and telecommunications services.
- Appointment of NRS as VAT Collection Agents:
- NRS is appointed to collect and remit VAT at a rate of 7.5% to FIRS.
- Both the supplier and intermediaries facilitating the supply may be considered NRS.
- Remittance Procedures:
- NRS must issue tax invoices and remit VAT within 21 days of the end of the month in which supplies were made.
- Foreign currency remittances follow specified electronic payment methods.
- Deregistration Process:
- NRS not meeting registration qualifications for three consecutive years may request deregistration.
- FIRS verifies eligibility before approving deregistration.
- General Obligations of NRS:
- NRS must maintain reliable records of supplies made to Nigeria, indicating type, date, and VAT payable.
- Monthly VAT returns, even for non-taxable months, are required through a link provided by FIRS or VAT Form 002NRS.
- Input VAT and Failure to Remit:
- NRS cannot deduct input VAT, as exports under the destination principle are zero-rated.
- Failure to account for and remit VAT may lead to recovery measures by FIRS.
- Coordination Between NRS and Self-Charge:
- NRS and taxable persons receiving supplies in Nigeria must coordinate for proper VAT collection and remittance.
- In case of NRS failure, the recipient may withhold or self-account for VAT in compliance with VATA sections.
These guidelines aim to streamline VAT compliance for non-resident suppliers, ensuring transparency and adherence to Nigerian tax regulations.
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.
