The Federal Inland Revenue Service ("FIRS" or "the Service") recently issued a Public Notice informing the public of its intention to automate Value Added Tax (VAT) Collection System for branded shops, super stores, general supermarkets, standard restaurants and eateries nationwide. According to the Public Notice, the Automated VAT platform ("VATrac" or eVAT) will become the approved channel for all VAT returns filing and payment processing effective 1 April 2020.
The Notice explains that the implementation of the eVAT platform will enable efficient and seamless collection and remittance of VAT on all VATable transactions in addition to enabling direct audit/reconciliation of all VAT transactions to ensure compliance with relevant tax laws.
In this regard, the eVAT platform will come into effect from 1 April 2020. Compliance and timely connectivity to the platform is mandatory, as it will be the approved channel for all VAT returns filing and payment processing. The Notice thus, advises all branded shops, super stores, general supermarkets, standard restaurants and eateries nationwide to liaise with their nearest FIRS Tax Office for registration on the platform.
In addition, the Notice directs affected businesses to ensure that their transactions/sales receipts to customers include the following details going forward:
- FIRS or Joint Tax Board Tax Identification Number (TIN);
- Print date;
- Goods/product description;
- Receipt number;
- Grand Total billed to the customer;
- Standard 7.5% VAT amount applicable on the Total.
The notice emphasizes that the eVAT platform is to facilitate ease of business and interaction with the FIRS and is not intended to have a disruptive or negative impact on daily operations and existing systems of affected taxpayers, as the platform is built to operate with any standard Point of Sales (POS) or other machine used to record sales etc.
The Notice indicates FIRS' intention to ensure relevant businesses comply with the new eVAT platform, however, there is very limited information about the modality of operations of the proposed eVAT platform in the public domain.
Similar to the move by the Lagos Internal Revenue Service (LIRS) to automate Consumption Tax collection in 2018 (read our tax alert on this here), this move by the FIRS to automate VAT filing and processing may raise concerns as to whether the administrative powers of the tax authorities extend to invasive monitoring of the internal control systems of the collecting agents. Also, it is uncertain how the eVAT platform would apply to businesses that are statutorily required to deduct VAT at source notwithstanding whether they are dealing with branded shops, super stores and other affected businesses.
In view of the questions that are bound to arise on this issue, affected businesses should consult with their tax consultants to understand their obligations under the existing VAT regime to ensure full compliance with the provisions of the law.
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