TAX ALERT ON PAY AS YOU EARN (PAYE): FILING OF 2016 RETURNS IS DUE

Under the Personal Income Tax Act, a taxable person was statutorily required to file a return of income for the preceding year at the expiration of 90 days from the commencement of every year of assessment. Therefore, every employer of labour is required to file all emoluments paid to its employees for the preceding year (2016), not later than January 31, 2017.

Failure to file the necessary returns by 31st January will attract penalties, which are avoidable through prompt compliance In line with Section 3 (1)(b) of PITA 1993 , taxable income of an employee includes any salary, wage, fee, allowance or gains or profit from employment including compensation, bonuses, premiums, benefits or other perquisites allowed or given or granted by any person to an employee. With the amendments to Personal Income Tax Act (PITA), 2011, the total emoluments of an employee is taxable irrespective of the manner the component is classified.

What is to be done?

Personal Income Tax Act imposes the duty to deduct appropriate tax from the total emolument of employees and remit same to the relevant tax authority. Every Employer of Labour is expected to:

• Collect Tax Form A for distribution to the employees.
• Certified the correctness of all salaries and allowances declared in the forms by their employees to ensure that correct reliefs are granted.
• Returns of completed Ta x Forms A to the relevant tax authority.
• Return all Tax deduction Cards (TDC) used in the operation of the PAYE Scheme and the End of the Year Returns should be made to the relevant tax authorities not later than January 31st of the following year.

Where it is operationally possible and for ease of PAYE scheme process, Lagos State Internal Revenue Service (LIRS) encourage employers of Labour to submit the total emolument of their employees en-bulk using an agreed spread sheet format.

For detailed information on reliefs and allowances and tax rates please consult LIRS offices on the Guidelines for the operation of Pay as You Earn.

TAX PLANNER FOR JANUARY, 2017

In addition to the above, please note the following due dates for other tax activities in January, 2017 for compliance: