How to Process Tax Refund from the FIRSNigeria

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There are many possible reasons why a taxpayer may request a tax refund from the Federal Inland Revenue Service (the “Service” or FIRS). Taxpayers may have unutilised withholding tax credit, erroneous deduction VAT at source on zero-rated goods or exempted goods by taxpayer’s customers, overpayment of tax, erroneous payment of tax due to SBIR to FIRS, among others.

Section 23 of the Federal Inland Revenue Service (Establishment) Act, 2007 provides, among other things, that the Service shall refund to taxpayers upon proper auditing by the Service, any overpayment of tax.

The refund is expected to be made within 90 days of the decision of the Service to refund. However, at the liberty of the taxpayer, the Service may set off the overpayment against the future tax of the taxpayer. A dedicated account for settling such refunds is to be opened by the Accountant-General of the Federation but administered by the Service.

In furtherance of its obligations under the referenced section, FIRS has gone to release guidelines under which taxpayers may request for tax refund.

According to the FIRS Guide, taxpayers requesting tax refund should follow the following checklist:

TAX REFUND PAYMENT CHECKLIST
The under listed items must be presented by the Taxpayer before a Tax Refund can be processed. They are:-
1.     The Taxpayer must be registered for Tax purposes with any of the FIRS LTOs/ITOs with evidence of registration.
2.      Original copy of Tax Refund Request application from Taxpayer or Lead/Collecting Bank stating clearly the following:
  • The precise ground for a refund.
  • The tax type for which refund application is being made.
  • The period which transactions giving rise to the request occurred.
3.     The Refund request application from the Taxpayer or Bank should be forwarded along with the following relevant documents depending on the  reason for the request:  such as;
         a.     Overpayment
         The relevant document includes:
                      i.        Original FIRS pay-in-slip(Bank Teller)
                     ii.        WHT Schedule (when applicable)
                    iii.        PAYE deduction Schedule (when applicable)
                    iv.        E-ticket (Electronic payment acknowledgement receipt)
                     v.        Copy of cheque or draft used for the payment
                    vi.        Original FIRS receipt issued for the payment
                   vii.        Where the correct payment was affected, the photocopy of FIRS receipt issued for the correct payment and original copy of FIRS receipt of the Overpaid amount.
 
        b.    Credit of SBIR taxes to FIRS
        The relevant document includes:
                      i.        Original FIRS pay-in-slip(Bank Teller)
                     ii.        WHT Schedule (when applicable)
                    iii.        PAYE deduction Schedule (when applicable)
                    iv.        E-ticket (Electronic payment acknowledgement receipt)
                     v.        Copy of cheque or draft used for the payment
                    vi.        Original FIRS receipt issued for the payment
 
        c.     Multiple Remittance/Posting by Lead/Collecting Banks:
                      i.        As in (b) above
                     ii.        Photocopy of FIRS receipt issued and availed (utilized) to the taxpayer
                    iii.        The original copies of un-utilized FIRS receipt issued for the double/multiple payment(s).
       d.    Stamp Duties:
                      i.        As in (b) above
                     ii.        Original copy of stamp duty document (un-utilized stamp duty only).
                    iii.        Photocopy of the stamp duty document for utilized stamp duty.
                    iv.        Original Letter of authorization from the taxpayer authorizing their agent to pursue and receive the claim.
 
4.   VAT Refunds of Zero-rated IN RELATION TO:
       4a. Non-Oil Exports:
      Application letter for VAT refund to be supported with:
                  i.           Evidence of export ; certified by the Nigerian Export Promotion Council (NEPC)
                  ii.          Proof of fund repatriation or utilization
                  iii.         Evidence of Tax/VAT registration
                  iv.         Proof of VAT payment to companies from which input materials were purchased with their Taxpayer Identification Numbers (TIN).
        4b. Diplomats and Foreign Embassies
       Application letter for VAT refund to be supported with:
                  i.           Evidence of VAT payment to taxable entities which must have registered for VAT.
                  ii.          Sales/payment invoices clearly indicating VAT charges from total invoice value
                  iii.        Proof of reciprocal bilateral agreement between Nigeria and other country (where applicable).
        4c. NGOs and Charitable Organizations
       Application letter for VAT refund to be supported with:
                  i.           Evidence of payment to taxable entities which should be registered for VAT.
                  ii.          Claim should relate only to projects or activity embarked upon.
 
5. Submission of Bank details showing the following information:
                  i.           Name of Bank
                  ii.          Address of Bank
                  iii.        Account Name
                  iv.         Account Number
                  v.          Sort Code and
                  vi.         Taxpayer Identification Number.
 
6. Other peculiar requirements
                  i.           Original Import duty document (If it is Import VAT Refund).
                  ii.          Exemption certificate (where applicable)
                  iii.         CBN Teller (where applicable)
                  iv.         RTGS Account Debit Statement
                  v.          Remittance report by the Lead bank
                  vi.         Evidence of transfer to Pool Account with the Central Bank of Nigeria (CBN statement.)
 
7.  Tax Refund Application will be processed in the name that appears on the Pay Direct platform in case of existing Taxpayers
 
8.             i.           Submission of Original FIRS receipts issued.
                  ii.          Submission of Original Stamped documents/instruments.
 
9. Submission of Evidence of Tax Payment/Remittance by Taxpayers/ Collecting Banks comprising of:
                  i.           Original Paydirect report
                  ii.          Original FIRS pay-in-slip(Bank Teller)
                  iii.         Original Import duty document (If it is Import VAT Refund).
                  iv.         Exemption certificate (where applicable)
 
10. In case of Multiple Remittance/Posting by Lead/Collecting Banks the following documents must be submitted:
                  i.           Evidence of remittance by the Lead/Collecting Banks comprising of:-
                  ii.          Pay Direct remittance report
                  iii.         CBN Teller (where applicable)
                  iv.         RTGS Account Debit Statement
                  v.          Remittance report by the Lead bank
                  vi.         Evidence of transfer to Pool Account with the Central Bank of Nigeria (CBN statement.)
11. Tax Refund Application will be processed in the name that appears on the Pay Direct platform in case of existing Taxpayers.
12.  Where Company is new; an authorization is required from a claimant.
13.  In case of Stamp Duties overpayment or discontinuation of incorporate/ registration items 1-13 applies, except No. 10
 

Written by Victor Osolake, ACTI, ACA

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