How Would a Taxpayer Ovoid Tax Query in Nigeria – In my previous article on Why Do Companies & Individuals Have Tax Query in Nigeria? I tried to define tax query as a question or enquiry on the tax payer, based on the tax return, to prove that the elements of the tax return that posses suspicion of doubt for its correctiveness is in deed correct.
Tax query covers every aspect of taxation. Tax Assessment Queries, Personal and corporate Income tax and property tax queries. Others relate to Value Added Tax and With-holding Tax payments, Particular industry/company pioneer status, industry trends, and performance assessments. Oil and gas companies and solid mineral operators have peculiar assessment challenges.
How would a taxpayer Ovoid tax Query in Nigeria
Table of Contents
In this article your concern is how to avoid tax queries most of which lead to tax audit or tax investigation. Again, I will highlight reasons why tax queries occur and make suggestions as to how to avoid them.
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How does tax query come about?
Tax query originates from the tax office desk examination. As soon a tax return is made and received in the tax office, such tax return will be subjected to examination by the tax inspector.
One of the focuses of the examination is to ensure that the return is accompanied by (i) the necessary, complete documents. The inspector will also look for (ii) errors and mistakes in the tax computation and in the accompanying financial documents.
At this time queries are sent out for any error or mistakes or incomplete documents found. This is the origin of tax queries. Again at this point in time, these tax queries could be explained by the taxpayer or his/her tax consultant, and the issue is settled.
How would a taxpayer Ovoid tax Query in Nigeria
Other reasons for tax query include the following:
If there is any reason to suspect that the tax payer’s –
- income is not complete
- income is understated
- Tax relieves are overstated
- Expenses deducted from the income is not, wholly, exclusive, necessary, and reasonably incurred in the generation of the income.
- Capital expenditure are included as operating expenses
- Tax avoidance programme are in place
- Supporting documents for assets and liabilities are not in the name of the tax payer
- Private/family expenses are included in the computation
- Relevant documents for VAT, Insurance claim, invoices etc. don’t agree with the financial statements
- PAYE, With-holding tax, VAT as shown were not promptly paid as stipulated by tax law
- Capital expenditure ( depreciation), general bad debts provisions are included in the computation
- Donation are not only to the approved bodies and within the ratio stipulated by law
- Loss rule relating to carry forward rules are not observed
- Commencement rule, change of accounting date rules etc are not observed
- Related party transactions are not adjusted
- Transfer pricing policy of the federal government is not effected
- That return is not made within the time limit.
How would a taxpayer Ovoid tax Query in Nigeria
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What are the remedies for tax query?
If you don’t want to be having tax queries, ensure that that all the issues raised above are settled before making your tax returns.
Consequently, ensure that:
- You have a tax advisor/consultant in place
- Your financial statements are complete and authentic
- Keep proper books of account, with a functional internal control system
- Avoid relate party transactions
- Expenses and claims are wholly, exclusively, necessarily, and reasonably incurred for the business.
- You make your returns within the stipulated legal timing
- Donations are only made to the approved bodies.
- You observe all tax rules, such as the commencement rules and change of accounting date rules,
- Separate your family from your business
- You keep up-to-date fixed assets register.
- VAT and WHT payments are made promptly and monthly.
If you have gone through all of these query issues raised you would have observed that most of them are tax technical issues. A tax consultant will help guide you, order your internal control systems that bothers on assets management etc. so that your accounting records will be seen as adequate for the purpose of determining the taxable profit or loss, and the tax payable.
How would a taxpayer Ovoid tax Query in Nigeria
Thanks for reading through. These are just free tax tutorials. If you are in the habit of visiting this website, you will be so educated on tax matters especially Nigerian tax matters.
Deacon Anekperechi Nworgu, a seasoned economist who transitioned into a chartered accountant, auditor, tax practitioner, and business consultant, brings with him a wealth of industry expertise spanning over 37 years.
