It is now 8 working days to the statutory deadline for filing of companies’ income tax (CIT) returns for companies with 31 December accounting year-end. Based on the amendment of the CIT Act by the Finance Act, 2019, companies filing self-assessment returns are required to settle their tax liabilities in full by the due date of filing.
However, following the one-month extension of the due date of filing CIT returns by the Federal Inland Revenue Service (FIRS), such companies now have till Friday, 31 July 2020 to submit their 2020 year of assessment tax returns and pay their tax liabilities (if any) without any penalties and interest. In line with the provisions of the CIT Act, failure to file CIT returns by the due date attracts a late filing penalty of ₦25,000 in the first month and ₦5,000 for every month that the default continues. Also, failure to pay CIT liabilities as and when due attracts a penalty of 10% of the tax due and interest at the prevailing Central Bank of Nigeria Monetary Policy Rate plus a spread of 5%.
Relatedly, the Income Tax (Transfer Pricing) Regulations, 2018 (“the Regulations”) requires a connected person to file its statutory transfer pricing (TP) returns within 6 months from the company’s accounting year-end. This implies that a connected person with 31 December accounting year-end date is required to file its TP returns for 2020 year of assessment by 30 June 2020. However, as TP returns is integral part of the annual CIT returns, taxpayers are expected to file their TP returns alongside CIT returns by the extended deadline of 31 July 2020. This is necessary to avoid a late filing penalty of ₦10 million, in the first instance, and ₦10,000 for every day in which the failure continues.
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