Tax Refunds in Nigeria- Myth or Reality
Tax refunds have a growing perception of being a myth in Nigeria. Like the saying “chickens will grow teeth when pigs begin to fly”, there is general pessimism on the likelihood of getting refunds for overpaid taxes.
However, the tax authorities will argue differently, and state that tax refunds are given for valid claims. In this article, we will highlight the general issues and bottlenecks surrounding the efficient administration of tax refunds in Nigeria, with a focus on Federal Inland Revenue Service (FIRS) refunds.
What provisions in the law give the taxpayer the right to a tax refund?
The Federal Inland Revenue Service Establishment Act 2007 (FIRSEA) stipulates that refunds can be made to taxpayers for overpayment of tax, after a proper audit has been carried out. Various tax laws also make provision for tax refunds subject to meeting specific conditions. Notably, the Companies Income Tax Act (CITA) refers to a repayment of overpaid taxes within 90 days upon request.
A taxpayer may request for a refund for various reasons including:
- Tax remittances made with mistaken Tax Identification numbers (TIN)
- Withholding tax deductions in excess of income tax payable
- When input VAT exceeds output VAT
