Objection to tax audit assessment is a formal internal review process for resolving discrepancies between the FIRS report and the tax consultant’s report. A taxpayer’s right to challenge a tax decision is covered in section 16 of the Tax Administrative Act. The objection should be limited to the change that contributed to the discrepancies. Objections to FIRS demand notice is usually on but not limited to Company Income Tax (CIT), Value Added Tax (VAT), Education Tax (EDT), Capital Gain Tax (CGT) and stamp duty.

A valid objection must be in line with the provisions of applicable laws. For an objection to be valid, it must:

            (i). be made within the number of days prescribed by the law (usually 30 days)

            (ii). set out the grounds of the objection and the assessable and total profits of the company

                  for that year and the amount of tax payable.

Procedure:

• Clearly identify the assessment being objected to and grounds for disputing it (this is usually based on the pre-tax audit carried out on our clients before the tax audit).
• Gather the required information, that is, documentary evidence supporting the basis of the objection which were not previously provided or are not made known to the RTA), attaching supporting documents helps to speed up the objection process.
• Verify all payments made by the company for the audited period for each tax items.

 

To reconcile CIT;

               * Recompute the CIT based on the company’s position by taking into consideration the general ledger,

                  trial balance and financial statements to determine the allowable items, disallowable items

                  and items that have been wrongly captured by FIRS.

 

To reconcile VAT;

               * Take into consideration the inflows in the bank statement, trial balance, general ledger and admin expenses

                   to determine items that constitute revenue for the period and compare it with the amount deducted by FIRS.

 

To reconcile EDT;

               * The revised education tax will be gotten from the revised assessible profit as computed in CIT which is 2% of

                  assessible profit.

 

To reconcile WHT;

            (i). The revised WHT based on the company’s position will be gotten from transactions using the fixed asset schedule

                  (fixed asset additions, general ledger, trial balance and other admin expenses).

            (ii). A correspondence will be written referring to the exact reference number, date, and liability in the demand notice

                  stating in details the reasons for the objection referring to any of the relevant supporting documents.

            (iii). After the correspondence has been prepared, reviewed and signed. It should be submitted to the Tax Station

                   (a copy of the objection will be taken for acknowledgement; this copy will be filed in the client’s file).

            (iv). Please note that after the objection letter has been submitted, it should be followed up on

                    by the officer-in-charge till a revised demand notice is sent by the Relevant Tax Authority