The Federal Inland Revenue Services or FIRS had published a notice for the people where it has expressed its intention to go for automation of VAT or value-added tax collection system. It has been done for branded establishments or shops, supermarkets, restaurants, etc. according to the notification the new VAT platform will be the way of approval for filing the returns. It will be effective from 1st April 2020.
There is a purpose for VAT automation. The notice explains the implementation of the electronic VAT platform that will enable transactions directly and for audit and reconciliation process.
When does Automation start?
The e-VAT will begin from 1st April 2020. It is expected that after the inception of e-platform and automation, there will be better compliance. It is mandatory to have proper compliance and connectivity. The connectivity to all channels is mandatory. It is going to be a channel for all VAT returns filing and for processing of payments. There is a suggestion given through the notice to all branded shops, supermarkets, good restaurants, eateries, etc all over the nation. It will have liaison with the nearest tax office for registration.
The notice insists upon the businesses that are affected by it to ensure all their transactions and sales receipts to customers should include the details as under:
- Tax Identification Number or TIN,
- Print date,
- The description of goods and products,
- The receipt number,
- The total of the bill to the customer.
There will be a 7.5% VAT imposed on the total amount. The notice emphasizes the e-VAT platform to help ease and make hassle-free business operation and better interaction with FIRS. The purpose of this is not at all disruptive or negative on the business operation in general. There will be a point of sale or POS.
What will be the Consequence of Automation of VAT Filing & Collection?
The notice has a purpose of indicating the intention of FIRS. The intention or purpose is to increase compliance of laws. The businesses should comply with the new e-VAT platform. There is little information about the way it will function. The exact modality of operation is absent. This initiative is like LIRS or Lagos Internal Revenue Service for automatic consumption tax collection. There is a rising suspicion whether there will be sweeping power to the tax authorities. It should not lead to dictatorial monitoring and too much internal control system. There is another uncertainty about the recent move of VAT. It is not clear in which way the e-VAT platform would apply to those businesses where VAT is deducted at source.
It is similar to Lagos Internal Revenue Service or LIRS intending to make the consumption tax automotive. This move by FIRS, for automating VAT filing and processing are raising concerns whether this facility will be misused by the tax authorities.
Ensure all transactions and sales receipts to customers should include the details like Tax Identification Number or TIN, date printed, the description of goods and products, receipt to bear number and total of the bill to the customer. It is expected that after the inception of e-platform and automation, there will be better compliance. In this situation, it is better to consultant the tax consultants who may be able to help you. They will let you understand your obligations towards tax compliance. GCC Filings is a great place to start when it comes to VAT return filing, registration, auditing, accounting and more.