Summary
On 14 August 2019, the Federal Inland Revenue Service (FIRS) issued a
Public Notice (PN) on deduction of tax at source from compensations
paid to agents by principal companies. The PN directs companies to
deduct and remit
Withholding Tax (WHT) and Value Added Tax (VAT) on
compensations such as commissions and rebates, which are due to
their distributors and customers.
Details
According to the FIRS, the issuance of the PN is aimed at
providing guidance to the public and in particular, taxpayers and
advisers on WHT and VAT, which is deductible from the compensations
or commissions due to distributors, agents and customers.
In the PN, the FIRS stated that compensations and commissions
earned by distributors/dealers are to be subjected to VAT and WHT.
According to the PN, its position is based on its Information
Circular No. 2006/02 issued in February, 2006 and the
Companies Income Tax Act (Rates, Etc. Deduction at Source
(Withholding Tax) Regulations.
