The Federal Inland Revenue Service will begin its new Value Added Tax regime for companies by September as the Federal Government doubles its search for revenues.
The FIRS said subject to the Finance Act 2023, VAT withheld or collected, VAT on items excluded from building, the new Tertiary Education Tax rate of 3 per cent and Investment Allowances and Convertible Currencies will become effective September 1, 2023.
Certain amended provisions of the Finance Act 2023 were enacted on 28th May, 2023 with the effective date of 1st May 2023.
However, the effective date was changed to 1st September 2023.
Some of the amended Sections are 14 (3) which deals on VAT Withheld or Collected.
The VAT Act was amended to the effect that persons appointed to withhold or collect VAT shall remit the VAT withheld or collected on or before the 14th day of the month following the month in which the VAT was withheld or collected, the FIRS said.
“Consequently. All VAT withheld or collected in August 2023 shall be remitted to FIRS on or before the 14th of September 2023. Similarly, VAT withheld or collected in subsequent months shall be remitted to FIRS not later than 14th day of the month following that in which the VAT was withheld or collected,” FIRS said.
FIRS also said the definition of “building” was amended in Section 46 of the VAT Act to exclude any fixture or structure that can be easily removed from the land.
Examples of items excluded are radio and television masts, transmission lines, cell towers, mobile homes, caravans and trailers.
It added, “As such, all the items removed from the definition of land have become chargeable to VAT. Companies letting. trading in or providing services with such items must charge VAT at the prevailing rate with effect from 1st of September, 2023.”
Companies will also begin the payment of the new 3 per cent rate on Tertiary Education Tax (TET).
By the amendment to Section 1(2) of TET Act, the rate of TET was changed to 3 per cent of assessable profits. The new TET rate of 3 per cent will take effect for TET becoming due in respect of the accounting period ending on or after 1st September, 2023.
On investment allowances and convertible currencies, Sections 32, 34 and 37 of the Companies Income Tax Act (CITA) granting allowances in respect of capital expenditure incurred in certain circumstances, and tax exemption on income earned in convertible currencies from tourists by hotels have been repealed.
“Consequently, the said allowances and tax exemption are no longer available for tax returns becoming due in respect of the accounting period ending on or after 1st September, 2023,” the FIRS said.