VAT REGISTRATION
FEDERAL INLAND REVENUE SERVICE
VALUE ADDED TAX REGISTRATION

• INTRODUCTION:

VAT Registration is process that identifies those persons who are required under the VAT act to be registered or liable to be registered and consequently required under the same Act to charge and account for VAT.
This notice which is a follow up to other information circulars on VAT, seeks to explain the requirements for registration of these persons and the obligations thrust on them as registered persons.

• WHO IS REQUIRED TO REGISTER?

All domestic manufactures, wholesalers, distributors, importer and suppliers of good and services in Nigeria are expected to register for VAT.
          There is no registration threshold for VAT.
Professional like lawyers, accountants, architects, engineers, etc who provide   professional services to their clients are required to register

• What is a Taxable activity?

A taxable activity includes any activity, other than those in the exempt list, conducted as a business, vocation, trade and profession. It includes the activities of public or government authorities, associations and clubs. It is important whether or not the activity is carried on for profit, but it should involve (or be intended to involved) the supply of goods and services to another person for a consideration.
Besides those expressly exempted by law, a number of activities are not taxable activities. These are:- Salary or wage from employment or directors’ emolument from appointment; Hobby activities; Private transactions, for example, the occasional sale of domestic or household articles, furnishings, personal effects or private motor vehicles; and House rent, except if paid for commercial purposes.

• WHAT ARE EXEMPT SUPPLIES?
• Exempt Goods:
•       Medical and Pharmaceutical products;
•       Basic food items;
• Beans, yam tuber, cassava, maize, millet, rice, milk, meat, fish, in their unprocessed form, and infant food, that is not consumed by adults.

( c)   Books and educational adults materials, including exercise books, laboratory equipment, schools fees. PTA levies etc;

•       Baby products, like feeding bottles, carriages, clothes, napkins, bay cream and powder, soap, toys and bay dresses;
• Commercial vehicles and their spare parts, that is, vehicles designed for the transportation of passengers.
• Agriculture equipments and products, fertilizer and veterinary medicine.
• Exempted Services; 
• Medical services
• Services by community banks, Peoples bank and mortgage Institutions.
• Plays and performances conducted by educational institutions as part of learning.

• HOW DOES A PERSON REGISTER?

All persons who are required to register for VAT should complete the ‘’VAT Registration form: VAT Form 001’’, obtainable free of charge from all offices of the FIRS throughout the country where a tax payer identification number (TIN) will be given. Those who want to make voluntary registration are also required to fill the form. The VAT act enjoins all those who are required to register for VAT to do so within a maximum period of six months from the date of commencement of business. A partnership, firm, trust, estate, joint venture or unincorporated body is required to complete the registration forms in so far as it engages in taxable activity. The prospective VAT able person is expected to obtain and complete the registration form and return it to the nearest office of FIRS where a taxpayer identification number TIN will be given.

• BENEFITS OF REGISTRATION

Some of the benefits of voluntary registration re that the registered person may:

• Claim a credit for any input VAT included in business purchases;
• Issue a tax invoice which a registered customer can credit as an input tax
• Once registered, the registered person will have to:-
• Keep proper VAT records
• Make regular VAT returns; and
• Account for VAT on all taxable supplies

• REGISTRATION CERTIFICATE

After due registration formalities and processes a registration certificate with TIN is issued. This is a form of acknowledgement that the person has been duly registered. The certificate is to be conspicuously displayed at the place of business and may be inspected from time to time by FIRS tax inspectors.

• RIGHTS AND OBLIGATIONS OF REGISTERED PERSONS

The possession of a VAT registration Certificate carries with it certain rights and obligations. The registered persons have the right for regular visit by the tax inspectors for inspection and advice. Certain obligations are expected for them as well. These include:

• Returns:

They are required to send to the nearest office of FIRS a VAT returns by the due date, i.e. by the last day of the month following the taxable period. The taxable period runs from the beginning to the end of the month. The ‘’ VAT return form: VAT 002’’ should be used.

• Payment:

They are required to pay net tax due for each period by the due date together with the VAT return.
          (c ) Tax Invoice:
                They are required to supply a tax invoice to the recipient of a taxable supply

• Debit and Credit Notes:

They are to issue a debit or credit note, as the case may be, where there is a change In the tax previously charged.

• Records:

They are required to keep sufficient records to allow the FIRS to assess the persons’ VAT liability.

• Change of Status:

They are required to advice the FIRS if there is a change in status (e.g. change in address)

• SPECIAL REGISTRATION

(I )   Registration of non-profit bodies:

• What is a non-profit body?

For VAT purpose, a non-profit body is any society, association or organization (whether incorporated or not) that is not run for profit or gain of any member, and whose rules do not allow the distribution of money, or other property, to any of its members. Most charitable organizations, sports clubs, services organizations, professional groups, churches, mosques, social clubs, PTA, e.t.c. are non-profit bodies for the purpose of VAT.

• Which Non-Profit Bodies should register?

 Any of these bodies, though may be non-profit making, which conducts a taxable activity and makes VAT able supplies should register. The overriding factor for consideration is the supplies made for consideration by the body.

• Branch Registration

Where the taxable activity of an entity is carried on in branches or divisions or depots and supplies are made from such outlets, each of the outlets must separately register for VAT. However, a common of family registration number will be assigned to the entity and all its branches or outlets. Separate code will be adopted for the Tax Office, line of trade and the particular branch or division.
           Each branch or division is to

• Maintain independent records for VAT accounting;
• Issue tax invoices; and
• Fie its VAT returns
• Agency Role

Basically, all registered persons are agents of the FIRS in the collection of VAT. All agents are therefore required to file regularly the VAT returns together with the required remittance, except if permitted by FIRS otherwise. In addition to the Nigeria customs Service (NCS), which is the primary agent for the collection of VAT on imports, the companies and bodies listed below are also agents in the collection of VAT on the services which they render to their customers. These bodies include:

• The Nigeria Ports Plc;
• The Shipping Companies;
• Clearing agents; and
• Domestic Airlines.

These companies are therefore required to register for VAT and issue tax invoice to their customers. They are to make VAT returns regularly too.

• Registration by Government Agencies:

Government Ministries, departments and agencies (MDA) are required to register for VAT. The service provider/contractor is to add VAT payable to the invoice and the MDA (the consumer in this case) is to deduct and remit it to FIRS at the time of payment or credit, whichever is earlier.

• Change in Status of Registered Persons

All registered persons are required to advise the local integrated tax office of any changes in their status. This includes any change in

• Names address, or principal taxable activities;
• Principal place of business;
• Nature of business;
• Principal Officers and any other changes.

•  VALUE ADDED TAX (VAT) OFFENCES AND PENALTIES

NOTE: In addition to legal against defaulting corporate bodies every Director, Manager, Secretary or other similar office of the corporate body or every person concerned in the management of the affairs of the organization, is severally guilty of the offence and liable to be proceeded against and punished for the offence in like manner as if he had himself committed the offence.
                                                                             PREPARED BY
Y.O.OLAJIDE (FCA, FCTI)
MANAGING PARTNER
Olajide and Associates Nig.
www.olajideassociates.com