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The Federal Inland Revenue Service (FIRS) in Nigeria has announced the approval of a complete waiver on penalties and interests for all outstanding tax liabilities, provided the full principal is paid before December 31, 2023. This move aligns with Section 32 of the Federal Inland Service (Establishment) Act, LFN 2004 (as amended) and is in acknowledgment of the challenges faced by many taxpayers in settling their tax obligations.
Zack Adedeji, the Executive Chairman of FIRS, clarified that the full penalty and interest would be reinstated if the outstanding undisputed liability remains fully or partially unpaid after the one-off concession window expires. According to Section 27(2) of the FIRS Act, the liability to pay a penalty is triggered by a default in complying with a demand for the payment of outstanding tax, not by the initial default in paying the tax.
Section 40 of the same Act stipulates that, in the case of withholding tax, interest and penalties accrue from the date of default. If convicted, the taxpayer will be required to pay the tax that should have been deducted and remitted, along with interest and penalties.
The FIRS emphasized that the waiver of interest is contingent upon the full settlement of the outstanding principal on or before December 31, 2023. After the expiration of this one-off concession window, the full penalty and interest will be reinstated for any remaining fully or partially unpaid undisputed liabilities.
The statement from FIRS expressed appreciation for taxpayers who have diligently complied with their tax obligations and sought continued support and cooperation for a more responsive and robust tax system.
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