Banks, MTN, Airtel to collect VAT on their products

The Federal Inland Revenue service (FIRS) has appointed MTN, Airtel and all money deposit banks as VAT collection agents starting from January 2023.

FIRS in a statement yesterday said the directive is in line with the provisions of Section 14(3) of the Value Added Tax Act Cap. VI LFN 2004 (as amended), that enables the companies to withhold or VAT charged on all taxable supplies made to them.

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The statement said the companies shall remit the tax withheld or collected, in the currency of transaction, to the service on or before the 21st day of the month immediately following the month the tax was withheld or collected.

“The tax withheld or collected under this notice shall be remitted in the format prescribed by the service but separately from VAT due on the companies’ taxable supplies. A supplier whose output tax is withheld, as provided in this notice, may deduct the input tax paid on the goods purchased or imported to make the taxable supply from the output.”

It said, however, that where the input tax paid to make the supply is not fully recovered from the output tax on other taxable services collected on other taxable supplies, the balance is refundable to the supplier.

In situations when the supplier is entitled to a refund, it may utilise the amount refundable to offset future VAT liability or request for a cash pay-out.

It said the service has instituted adequate measures to ensure prompt payment of refundable input tax under this arrangement.