- 15 Marks
Question
Oloriogun Logistics Limited renders consultancy services to newspaper publishing companies in Nigeria. All the publishers are limited liability companies which deduct appropriate withholding taxes from all consultancies and remit to relevant tax authorities within the time limit specified by the law. Oloriogun Logistics Limited makes up its accounts to December 31 each year and suffered withholding tax on the invoices raised for specific dates as follows:
| Date of Remittance | Month of Transaction | Invoice Number | Amount (N) |
|---|---|---|---|
| 19/2/2015 | Jan. 2015 | 002/01 | 350,000 |
| 19/3/2015 | Feb. 2015 | 003/02 | 670,000 |
| 20/4/2015 | March 2015 | 004/03 | 810,000 |
| 20/5/2015 | April 2015 | 005/04 | 305,000 |
| 19/6/2015 | May 2015 | 006/05 | 295,000 |
| 20/8/2015 | June 2015 | 008/07 | 922,000 |
| 21/9/2015 | Aug. 2015 | 009/08 | 270,000 |
| 21/10/2015 | Sept. 2015 | 010/09 | 195,000 |
| 20/11/2015 | Oct. 2015 | 011/10 | 408,000 |
| 21/12/2015 | Nov. 2015 | 012/11 | 495,000 |
| 21/01/2016 | Dec. 2015 | 012/12 | 396,000 |
| 21/03/2016 | Jan. & Feb. 2016 | 01/02 | 1,649,000 |
Withholding tax credit notes on the above invoices were forwarded to Diederik Logistics Limited, but the accountant was confused as to which year of assessment to claim these tax credits.
Required:
(a) Calculate the withholding tax credits for each of the above invoices. (6 Marks)
(b) Determine the total amount of withholding tax credits to be claimed for each year of assessment. (3 Marks)
(c) What is the due date for remitting withholding tax returns to the tax authority mentioned in (b) above? (1 Mark)
(d) State three transactions exempted from withholding tax in Nigeria. (3 Marks)
(e) List four distinct groups referred to as agents of the government for the collection and remittance of withholding tax in Nigeria. (2 Marks)
Answer
(a) Oloriogun Logistics Limited
Calculation of Withholding Tax Credits Based on the Invoices:
(a) Calculation of Withholding Tax Credits Based on the Invoices:
(b) Total Amount of Withholding Tax Credits to be Claimed for Each Year of Assessment (Assuming no other transactions after February 2016):
- 2016 Year of Assessment: N511,600
- 2017 Year of Assessment: N164,900
(c) Due Date for Remitting Withholding Tax Returns:
- Withholding tax returns should be remitted to the relevant tax authority by the 21st day of the month following the month in which the deductions were made.
(d) Transactions Exempted from Withholding Tax in Nigeria:
- Direct purchase across the counter (cash sales).
- Direct purchase of raw materials from suppliers (not under contract of supply).
- Sales made in the ordinary course of business.
- Claims in insurance business;
- Interest on bonds; for and
- Dividends redistributed by holding companies.
(e) Groups Recognized as Agents for Withholding Tax Collection and Remittance:
- Corporate bodies (companies).
- Individuals, firms, and sole traders.
- Government ministries, departments, and agencies.
- Statutory bodies and public authorities.
- Tags: Compliance, Exemptions, Tax Agents, Tax authority, Tax Credits, Withholding Tax
- Level: Level 2
- Topic: Withholding Tax (WHT)
- Series: MAY 2019
- Uploader: Kwame Aikins