Sequel to our Tax Alert Issue 3.6|March 2020 analysing palliative measures introduced by the Federal Inland Revenue Service (FIRS) and other agencies of the Federal Government, the FIRS has announced the following additional measures to further manage the impact of the Coronavirus disease (COVID-19) on taxpayers:
We commend the FIRS for introducing additional measures to help reduce the effects of COVID-19 on taxpayers. While, the phrase “early payment” was not defined, it can be taken to mean payment in advance or by the last due date for payment. However, beyond granting waiver of penalty and interest in such instance, the FIRS should consider waiver of interest and penalty where a taxpayer files its tax returns by the due date, but is not in a position to fully pay its tax liability at once due to the severe impact of COVID-19 on its cashflow. France, Netherlands, Austria and Belgium are examples of countries that have announced plans to waive interest and penalty on any late payment of income taxes during the pandemic.
We also laud the FIRS for permitting companies to settle their FOREX-denominated tax liabilities in Naira. At the same time, the FIRS should be willing to allow such taxpayers the flexibility to pay their tax liabilities in instalments if they are not liquid enough to make the payment in a lump sum.
Lastly, the extension of PIT filing deadline and indefinite suspension of field tax audit, investigation and monitoring visits by the FIRS are steps in the right direction given the need to maintain social distance in order to curtail the spread of COVID-19.
We expect the FIRS to continue to review the COVID-19 situation and introduce additional palliative measures for business survival in this challenging time.
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