Inland Revenue Tax Compliance Best Practices

Over the last quarter, 20+ businesses have come to us for guidance after receiving noticed for sales tax audits. This isn’t a coincidence. Sales tax audits are increasing, especially within e-commerce. States are increasing their efforts to find non-compliant businesses. It's been almost 7 years since the Wayfair decision, and states aren’t as lenient as before. Audit task forces are growing in high-population states like California, Texas, and Illinois. And since sales tax revenue funds budget items, states have a vested interest in closing the gap between the taxes owed and the taxes paid. Pre-audit questionnaires are also becoming more common. States are sending them to businesses, even if they haven't registered, requesting up to 3 years of sales data. And on top of all this, states are working together—sharing business information, making it easier to find non-compliant sellers. So if you’re non-compliant in one state, you may be caught by another. Staying compliant across every state you sell in is more important than ever. You might be subject to an audit if:  → You've failed to register and remit sales tax → You report high amounts of sales tax immediately after registering → You're connected to other vendors or customers being audited The penalties for non-compliance are high and getting stricter. In some states, penalties can be as high as 39% of taxes owed. My advice to ensure compliance: 1. Stay on top of it—once you’ve reached the nexus threshold in a state, register and file.  2. Partner with an expert or use sales tax software to help you keep track of changes. 3. If you’ve been non-compliant for some time, a Voluntary Disclosure Agreement could help reduce penalties and liability. States aren’t playing around, and they will come knocking. The cost of non-compliance far outweighs the effort of staying on top of your sales tax obligations. If you have any questions about staying compliant, shoot me a message—happy to help.

Client says: We don’t have old records. GST says: See you in court. Every professional has faced this: -"Sir, woh file toh milti hi nahi." -"Woh accountant chala gaya..." -"Invoice copy nahi mil rahi." That’s where the real audit begins. GST Audit: Just a Check or a Time Bomb? “One Nation, One Tax” – four words, yet the depth they carry in terms of compliance and litigation is massive. Let’s break down something that many still take lightly – GST Audits/Annual Returns/Reconciliation Statement. -->Section 65 – Departmental Audit: Audit conducted by GST officers at the taxpayer’s premises or department’s office to verify records, returns, and ITC; initiated by the department based on risk parameters or random selection. -->Section 66 – Special Audit: Ordered by the department during scrutiny or investigation when declared value or ITC is in doubt; conducted by a CA or CMA nominated by the Commissioner; expenses borne by the department. -->Section 35(5) – Audit by Registered Person (Omitted w.e.f. FY 2020-21): Earlier required taxpayers with turnover above the threshold to get their accounts audited and file GSTR-9C certified by a CA/CMA; no longer applicable after Finance Act, 2021. -->Section 44 – Annual Return (GSTR-9): Annual return to be filed by regular taxpayers; mandatory if turnover exceeds ₹2 Cr (subject to exemptions); summarizes outward and inward supplies for the financial year. -->Section 44 – Reconciliation Statement (GSTR-9C): Reconciliation between books of accounts and GST returns; mandatory for taxpayers with turnover above ₹5 Cr; must be certified by a CA or CMA. Mistakes done five years ago can knock today - even a small mismatch or a missing document. Pro Tip: Health Check Your GST Compliance -Do quarterly or at least annual health checks. -Maintain invoice-level support for ITC, reversals, and exemptions. -Download and save GST data monthly – don’t rely on portal history. -Reconcile GSTR-2B with purchases regularly. -And endless things to check In GST, ignorance today = litigation tomorrow. Don’t just file returns, build your defense file - especially when: -You’ve crossed turnover limits. -Claimed ITC on large capital purchases. -Done zero-rated/export with refund. -Been part of merger/branch transfer/sale. Takeaway: Don’t let GST become a silent risk on your balance sheet. Treat it with the seriousness it deserves. #gst #gstnotice #gstaudit #healthcheck #litigation #gstwithtarjani

VOLUNTARY TAX COMPLIANCE IS CHEAPER……. Tax compliance is often viewed as a necessary evil, but it's essential to recognize that adhering to tax regulations can save businesses significant time, money, and resources in the long run. In contrast, tax non-compliance can lead to severe financial and reputational consequences. The Costs of Non-Compliance: 📌 Penalties and Fines: Ranges from 10%-100% of unpaid taxes, plus interest @ 32.75% annually. 📌 Legal Fees: Defending against tax audits and disputes. 📌 Reputation Damage: Non compliance Stickers pasted on company premises could cause loss of customer trust and business credibility. 📌 Opportunity Costs: Missed investments and growth opportunities by virtue of not having compliance documents like Tax Clearance Certificates, etc The Benefits of Compliance: 📌 Avoid Penalties: No fines or interest on timely payments. 📌 Reduced Audit Risk: Lower likelihood of tax audits/investigation. 📌 Improved Reputation: Demonstrated commitment to transparency and integrity. 📌 Increased Efficiency: Streamlined financial processes and record-keeping. 📌 Better Financial Planning: Accurate tax provision and forecasting. Best Practices for Tax Compliance: 📌 Maintain Accurate Records. 📌 File Tax Returns Timely. 📌 Conduct Regular Tax Health Check. 📌 Stay Up-to-Date with Tax Laws and Regulations. 📌 Consult with Tax Professionals. Tax compliance is not only a legal requirement but also a sound business strategy. By prioritizing compliance, businesses can avoid costly penalties, reduce risk, and improve their financial health. Invest in tax compliance today and reap the benefits of a secure and prosperous tomorrow. Consult with a tax professional to ensure your business is in compliance with all tax regulations. Protect your reputation, save money, and focus on growth. Kreston Pedabo Kreston Global #taxcompliance is key 🔑

📢 𝐂𝐨𝐮𝐧𝐭𝐝𝐨𝐰𝐧 𝐭𝐨 𝐭𝐡𝐞 𝐂𝐨𝐦𝐦𝐞𝐧𝐜𝐞𝐦𝐞𝐧𝐭 𝐨𝐟 𝐍𝐢𝐠𝐞𝐫𝐢𝐚’𝐬 𝐍𝐞𝐰 𝐓𝐚𝐱 𝐀𝐜𝐭𝐬 — 𝐀𝐫𝐞 𝐘𝐨𝐮 𝐑𝐞𝐚𝐝𝐲? The commencement of the new tax Acts is around the corner. As businesses anticipate implementation, this is the right time to start preparing and reviewing compliance positions. Here’s what every CFO, tax leader, HR and finance team should be doing before Day 1… Here are a few practical steps to begin now: 📘 1. 𝑪𝒐𝒏𝒅𝒖𝒄𝒕 𝒂 𝑻𝒉𝒐𝒓𝒐𝒖𝒈𝒉 𝑹𝒆𝒗𝒊𝒆𝒘 𝒐𝒇 𝒕𝒉𝒆 𝑨𝒄𝒕 Read the Acts and identify how the new provisions affect your company’s tax obligations, particularly for income and transaction taxes. 💼 2. 𝑹𝒆𝒗𝒊𝒆𝒘 𝑰𝒏𝒕𝒆𝒓𝒏𝒂𝒍 𝑺𝒚𝒔𝒕𝒆𝒎𝒔 For example, model your payroll systems with the Act’s employment income provisions, including tax bands and allowable reliefs. Compare with current system and evaluate. Do same for other tax type Also, make sure all employees register for tax purposes. ⚖️ 3. 𝑩𝒖𝒊𝒍𝒅 𝒂 “𝑻𝒂𝒙 𝑹𝒊𝒔𝒌 𝑴𝒂𝒕𝒓𝒊𝒙” Map all exposures across CIT, VAT, CGT, PAYE, and Withholding Tax, pointing out how your business is affected 🕒 4. 𝑹𝒆𝒗𝒊𝒆𝒘 𝑬𝒙𝒊𝒔𝒕𝒊𝒏𝒈 𝑪𝒐𝒏𝒕𝒓𝒂𝒄𝒕𝒔 Assess how new tax rules impact existing agreements, supplies and sales agreements, business structure etc Integrate TIN verification checks into client/vendor onboarding to avoid applicable penalties 📄 5. 𝑹𝒆𝒂𝒔𝒔𝒆𝒔𝒔 𝑰𝒏𝒄𝒆𝒏𝒕𝒊𝒗𝒆𝒔 𝒂𝒏𝒅 𝑬𝒙𝒆𝒎𝒑𝒕𝒊𝒐𝒏𝒔 Evaluate how the Act affects your eligibility for existing tax holidays, such pioneer status, or investment incentive such as Free Trade Zone Incentives 🤝 6. 𝑬𝒏𝒈𝒂𝒈𝒆 𝑻𝒂𝒙 𝑨𝒅𝒗𝒊𝒔𝒆𝒓𝒔 𝒂𝒏𝒅 𝑪𝒐𝒏𝒔𝒖𝒍𝒕𝒂𝒏𝒕𝒔 Seek professional guidance on gray areas, exemptions, and compliance strategies tailored to your sector. 💡 7. 𝑻𝒓𝒂𝒊𝒏 𝒂𝒏𝒅 𝑺𝒆𝒏𝒔𝒊𝒕𝒊𝒛𝒆 𝑺𝒕𝒂𝒇𝒇 Organize internal sessions to educate finance, HR, and compliance teams on the implications of the new provisions and practical compliance steps. Join webinars from Industry Experts and Organizations 𝐓𝐫𝐚𝐧𝐬𝐢𝐭𝐢𝐨𝐧 𝐏𝐞𝐫𝐢𝐨𝐝 𝐚𝐧𝐝 𝐑𝐞𝐠𝐮𝐥𝐚𝐭𝐨𝐫𝐲 𝐆𝐮𝐢𝐝𝐚𝐧𝐜𝐞 The Nigeria Revenue Service (NRS) is expected to issue regulations and implementation guidelines to clarify key provisions of the Act and transition rules. Businesses should stay alert and monitor tax updates closely to ensure they align with emerging guidance before enforcement begins. Regulatory reforms always present two things, risks and opportunities. The key is identifying how you are affected before implementation begins and act accordingly 𝘈𝘴 𝘸𝘦 𝘤𝘰𝘶𝘯𝘵 𝘥𝘰𝘸𝘯 𝘵𝘰 𝘵𝘩𝘦 𝘤𝘰𝘮𝘮𝘦𝘯𝘤𝘦𝘮𝘦𝘯𝘵 𝘥𝘢𝘵𝘦, 𝘱𝘳𝘦𝘱𝘢𝘳𝘢𝘵𝘪𝘰𝘯 𝘵𝘰𝘥𝘢𝘺 𝘳𝘦𝘮𝘢𝘪𝘯𝘴 𝘵𝘩𝘦 𝘣𝘦𝘴𝘵 𝘴𝘵𝘳𝘢𝘵𝘦𝘨𝘺 𝘧𝘰𝘳 𝘤𝘰𝘮𝘱𝘭𝘪𝘢𝘯𝘤𝘦 𝘵𝘰𝘮𝘰𝘳𝘳𝘰w. 🙏 Stay tuned, reshare, and connect with Olamide Olaniran ACA. Check my profile for the highlights of some of the provision of the Acts and what it means to you and your business. Have a great week 😊

How to Avoid an Automatic ₦5 Million Penalty from FIRS Starting next year, the Federal Inland Revenue Service (FIRS) will begin enforcing stricter compliance under the Nigeria Tax Administration Act, 2025. Important information: Any company that awards a contract to a vendor not registered under Nigerian tax laws meaning they have no valid Tax Identification Number (TIN) will face an automatic ₦5 million penalty. And that’s not all. Payments to such vendors will also be disallowed as deductible expenses, which means you’ll pay higher company income tax. 📌 Example: A logistics firm pays ₦20 million to a contractor who isn’t tax-registered. FIRS catches it. ✅ Result: ₦5 million penalty, plus the ₦20 million expense is disallowed for tax purposes increasing the firm’s tax liability. ✅ Next Steps for Companies: 1. Verify vendor TINs before engagement — make it a mandatory procurement step. 2. Update vendor onboarding forms to include CAC and FIRS registration details. 3. Train finance and procurement teams on the 2025 compliance rules. 4. Engage a qualified tax advisor to review your vendor list and plug compliance gaps before year-end. From 2025, companies doing things right will enjoy significant tax savings while those that ignore compliance will pay for it, literally. #toyinolufon