VAT Automation Programme FAQ
What is VAT Automation?
A tax system integrated with advanced technology to collect VAT from taxpayers automatically
Is automation mandatory for every tax payer?
Yes, it is mandatory for all taxpayers to automate within thirty (30) days of being served a letter for your sector.
Is there a legal basis for the automation?
Yes, section 25 subsection 4 of FIRS Establishment Act as amended under Section 51 of Finance Act 2020
Who is a Merchant?
Merchant is being used here to refer to a taxpayer or a business supplying goods and services.
What is automation platform?
This is the application that serves as a base where automation of tax administration processes are performed
What is TIN?
TIN is the short form of Tax Identification Number; this is the FIRS unique tax reference number allocated and issued to identify a person (individual or Company) for tax purposes.
What is EJ report?
Electronic Journal Report; it captures and summarises all transactions for a particular period i.e. input VAT, output VAT, zero-rated sales, VAT exempt sales, total sales (VAT inclusive), total sales (VAT exclusive) and VAT amount
What are MDA sales?
Income earned on transactions with Government Ministries, Departments and Agencies on which VAT deductions were done at source.
Does the automation use internet?
Yes, an internet connection is required for automation
Who pays for the internet?
Does the VAT automation recognize exempt goods?
Yes - all the expanded list of exempt goods & services is in line with VAT Act as amended by the F.A 2020 has been captured into the automation platforms
Does the VAT automation recognize zero rated items?
Yes, all zero-rated goods and services in the First Schedule of the VAT Act are recognized.
What if I don’t want to use or key into the VAT automation?
Keying into VAT automation is not optional; it is a compulsory obligation according to the Nigerian Tax Law and failure to do so will lead to sanctions in line with Section 26 of the FIRS Establishment Act as amended by Section 52 of Finance Act 2020
Can I claim input VAT from a merchant that has no TIN?
No. For an input VAT claim to be valid, it has to be issued by a merchant/business/individual duly registered with FIRS and having a TIN. Note that tax invoice is a prerequisite for making input claim and the VAT Act already states what qualifies as a tax invoice. There is no how a merchant with no TIN will issue an invoice meeting such requirements during supply.
Will there be receipt for goods bought through VAT automation platform?
Yes, all goods/items bought will be receipted
Does the new receipt carry any feature different from the normal receipt?
Yes- the unique difference is that it has FIRS logo and a barcode.
Is it possible to file two different VAT returns for the same month on the VAT automation platform?
The automation platform processes all sales for the month as one return. However, VAT on other auxiliary income may be filed on Tax Pro Max (FIRS Tax Administration System)
How can I file & pay VAT in foreign currency transaction?
Same way as local currency but you select the returning currency or currency of transaction (i.e., currency type)
Where there is no income, how do I file for VAT for that month?
Follow the regular way of filing BUT populate NIL in the relevant fields
Once a return is submitted, can I go back to review and adjust an information entered earlier?
No, submission cannot be adjusted nor reversed. Good care should be taken to review all entries before submitting.
Is there a provision for installment payment on the platform?
No, the assessed output VAT is taken by direct debit on a designated date.
Will there be a penalty if I file after the cutoff date of 21st?
Yes, penalty & interest will apply after the due date of filing.
Do I still have to file if I trade only on exempt goods?
How is payment remitted under VAT automation?
By a direct debit mandate authorizing the remittance of the VAT aggregate amount for the month from a designated bank account
What is meant by deduction at source?
Payment by direct debit mandate from a designated bank account provided to FIRS
What happens if the VAT amount due for payment is higher than the envisaged amount set aside through direct debit mandate?
A new direct debit mandate will have to be set up to cover the new VAT amount
What is NDA?
What is the assurance that my data is safe after connection or how is confidentiality addressed under VAT Automation?
FIRS has confidentiality clauses in its agreement and will Sign a Non-Disclosure Agreement (NDA)
When is payment remitted under VAT Automation?
VAT Automation payment allows on or before the latest time provided by law for the remittance (21st of each month)
What is the role of FIRS Vendors/Consultants in VAT Automation?
To provide end-to-end automation systems that lead to automated remittance
What is VFD?
VFD means Virtual Fiscal Device. It is a utility software that delivers the automation program on the tax payer's electronic invoicing system
Are there offline capabilities?
Yes. It has Offline capabilities limited to 150 offline transactions per till/point of sales everyday
What is integration?
Integration is the linking of the tax payers invoicing system to their user account on the VAT Automated Platform (VATrac) where they can easily manage their VAT Returns including filing and payment.
Is VAT form 002 embedded in the tax payer’s user account in the automation platform?
Yes, the VAT Returns Form 002 is embedded in their user accounts
What is API?
Application Program Interface; it is a model of the VFD that uses a single interface to integrate a taxpayer. It is designed for large taxpayers with multiple branches/outlets across multiple cities.
What happens if a receipt is void or goods are returned?
When a receipt is voided or goods returned, the system will convert the invoice or receipt into a credit note which will be used to adjust that transaction when filing your returns. The credit note covers transactions at both the item Level as well as the invoice Level