FIRS updates TaxPro-Max Module on VAT Filing and Payment

The Federal Inland Revenue Service (FIRS) recently made updates to the features for value added tax (VAT) filing and payment module on the TaxPro-Max (TPM or “the platform”).

One significant change is the introduction of an input VAT credit mechanism, which requires suppliers to remit VAT collected from customers to the FIRS using a new sales schedule format for the customers to claim the allowable input VAT on such purchases. The new monthly sales schedule includes additional information, which should be uploaded to the TPM, such as customers tax identification numbers (TINs), description of items sold and status of the items for VAT purpose (i.e., VATable, zero-rated or exempt). Remarkably, where the supplier does not know a customer’s TIN and fails to enter zero in the relevant cell, the customer will NOT be able to claim the input VAT.

Another notable change is the modification of the sales adjustment process. The sales adjustment feature allows a taxpayer to modify the sales figures reported in the prior month’s returns in the current month where there are changes to the information filed earlier. Based on the updates, a taxpayer is now required to provide the item identification number of the sales for that month(s) in order to make such adjustments. Further, where a taxpayer needs to make a sales adjustment for the previous month, the platform will reverse the VAT credit granted in that month.

Though the FIRS is yet to issue a formal Public Notice on the changes, various local tax offices have been conducting taxpayers’ sensitization exercises to demonstrate the new features while also providing user guides and illustrative videos.

Commentary

The updates to the TPM platform demonstrate FIRS’s continued efforts to improve tax compliance processes, increase tax collections and reduce revenue leakages. However, the new changes have created some unintended issues which the FIRS needs to promptly address in order to avoid decline in VAT collection and unnecessary conflicts with taxpayers. We have summarised these issues below as follows: