Tax audits in Nigeria are usually carried out by the Federal Inland Revenue Service (FIRS) and the state tax authorities. These audits are aimed at ensuring that individuals and companies are paying the correct amount of taxes and complying with tax laws.
Some common tax audit issues in Nigeria include:
Under-declaration of income: This is when taxpayers fail to accurately report their income or revenue earned, leading to a lower tax liability. This can occur in different ways, such as through the use of unreported cash transactions or failing to report all sources of income. This can be tackled by ensuring that all income and revenue earned are accurately reported and declared in tax returns.
Non-remittance of taxes: This occurs when taxpayers collect taxes from customers or employees but fail to remit them to the tax authorities. Non-remittance of taxes can be intentional or unintentional. In some cases, taxpayers may intentionally collect taxes and fail to remit them to the tax authorities. In other cases, taxpayers may inadvertently fail to remit taxes due to poor record-keeping or lack of knowledge about their tax obligations. To tackle this issue, it is important to have a good record-keeping system to track all tax collections and ensure prompt remittance.
Non-compliance with tax laws: This refers to situations where taxpayers fail to comply with tax laws and regulations. Non-compliance can occur in different ways, such as failing to file tax returns, failing to pay taxes due, or failing to comply with tax laws and regulations. To tackle this issue, taxpayers need to familiarize themselves with the relevant tax laws and regulations and ensure compliance. It is better to hire a tax consultant. The fee a taxpayer will pay a tax consultant will not be comparable to the costs of non-compliance that he will help to avoid.
Inconsistencies in tax returns: Taxpayers may make errors or inconsistencies in their tax returns, leading to a mismatch between reported income and actual income. This can occur in different ways, such as through mathematical errors, incorrect reporting of income or deductions, or failure to include all relevant information. To tackle this issue, it is important to review and verify tax returns before submission to ensure accuracy and consistency.
Failure to keep proper records: Taxpayers are required to keep proper records of all their financial transactions, including income, expenses, and tax payments. Failure to keep proper records can lead to tax audit issues. To tackle this issue, taxpayers should maintain accurate and up-to-date records of all financial transactions.
In summary, if the tax audit reveals that the taxpayer has not paid the correct amount of taxes or has not complied with tax laws, he will be asked to pay additional taxes, interest, and penalties. To avoid tax audit issues, taxpayers should ensure accurate reporting of income, prompt remittance of taxes, compliance with tax laws, consistency in tax returns, and proper record-keeping.
Are you facing tax audit issues, you can contact us so that we can help you resolve it professionally.