The tax year runs from 1 January to 31 December. Companies with financial periods other than the calendar year are taxed on their financial period ending during the calendar year.
Companies are expected to submit a tax return not later than four months after the end of the financial year. They may file an application for extension of filing time for not more than two months.
Payment of tax
CIT is due for payment at the same time as the due date for filing the return. The tax is payable in four equal instalments at the end of each quarter (i.e. March, June, September, and December) in each year of assessment, but such payments are not deemed to be the actual tax payable.
At the end of the year, all taxpayers are required to file final tax returns and pay any tax outstanding. The final return and tax are due within four months after the financial year-end.
There are also instances where the Commissioner-General of the GRA may issue an additional assessment after conduct of an audit. Where such assessment is served, the tax is payable within 30 days after service of the notice. At the discretion of the Commissioner-General of the GRA, the time for payment may be extended.
Where tax is not paid by the due date, a penalty is calculated at 125% of the statutory rate, compounded monthly, and applied to the amount outstanding at the start of the period.
Tax audit process
The GRA assesses taxpayers on a regular basis. The tax laws give powers to persons authorised by the Commissioner-General of the GRA to gain full and unlimited access to the taxpayers’ premises, records, and electronic information. Industries such as mining, upstream oil and gas, and financial institutions are more likely to be selected for a tax audit. Also, request for a tax refund is also likely to lead to a tax audit. The GRA usually gives notice of its intention to perform a tax audit and, after performance, prepares a report on its findings, which is then shared with the taxpayer.
Statute of limitations
The Revenue Administration Act, 2016 (Act 915) (RAA) requires all taxable persons to maintain records of all receipts and payments, revenue and expenditure, and all assets and liabilities for a period of not less than six years. This is in conjunction with the fact that the Statute of Limitation bars actions to recover tax after 12 years.
Automatic exchange of financial account information
The Standard for Automatic Exchange of Financial Account Information Act, 2018 (Act 967) imposes on financial institutions an obligation to report to the GRA information regarding certain financial accounts of an individual or entity and conduct due diligence with respect to those financial accounts.
The reporting financial institution is required to submit an annual report no later than six months following the end of the calendar year to which the report relates.
Topics of focus for tax authorities
Topics of focus for the tax authorities include:
- tax refunds
- reconciliations of returns to financial records
- anti-avoidance arrangements, and
- transfer pricing.