FIRS Issues Demand Notices Based On Property Valuation

In its drive to increase tax revenue generation, Federal Inland Revenue Service (FIRS) has started applying the value of property as a basis for assessing companies to income tax (CIT) rather than turnover basis of assessment. The FIRS recently issued notices to several companies demanding for payment of CIT assessed on this basis. The foregoing is a fall out of property valuation exercise carried out by FIRS in October, 2016.

Highlights of the demand notices include:

• The tax is assessed at 6% of the value of the properties and it is payable within 30 days of receipt of the notice. In arriving at the above rate, FIRS deemed 20% of the value of the properties as turnover, and then subjected the deemed turnover to CIT at 30%. The assessment is regardless of whether or not the affected companies have been tax audited for the reviewed period.