Mind Your Tax Affairs: Filing of Tax Returns (2)

The due for filing annual tax returns is six (6) months after the accounting year-end. For instance, entities with December 31, 2018 year-end are required to file annual returns on or before June 30, 2019.

Any company that fails to file returns within the due date for filing tax returns shall be liable to pay Late Returns Penalty (LRP) as follows:

• N25,000 in the first month in which the failure occurs.
• N 5,000 for each subsequent month the failure continues.
• On conviction, a director or principal officer or agent of the company shall be liable to pay a fine not exceeding N 100,000 or imprisonment for a term not exceeding two (2) years or both.

An entity can write to apply for extension of time to file its annual returns before the due date for filing. The application for extension of time shall be granted if the entity gives good cause or reason(s) beyond its control, why the tax returns could not be filed within the due date for filing.

In addition to the annual tax returns, related companies that carry out transactions between themselves are required to file Transfer Pricing (TP) Declaration Form and Transfer Pricing Disclosure Forms.

The TP Declaration Form reports information about an entity’s business, directors, parent company and related parties or entities, while TP Disclosure Form reports the value or amount of transactions carried out between the related parties or entities within the accounting year-end.

Penalty for not filing TP Declaration Form is N10 million in the first month of failure, and N10,000.00 for every day the failure subsists. While failure to file TP Disclosure Form is N10 million or 1% of the value of the related party transactions whichever is higher, and N10,000.00 for every day the failure subsists.

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