Recently, the Federal Inland Revenue Service (FIRS) facilitated the signing of a Memorandum of Understanding (MoU) among the major players in the profession of Taxation and Accounting in Nigeria. The main objective of the MoU is to ensure that members of the three named professional bodies stay within the boundaries of the Charters setting them up; and to further standardize the mode of filing tax returns by taxpayers or tax practitioners on behalf of their respective clients.
After series of discussions, engagements and mediation, each party agreed to uphold the tenets of professionalism which led to the signing of the MoU for the benefit of the members of the Chartered Institute of Taxation of Nigeria (CITN), Institute of Chartered Accountants of Nigeria (ICAN) and the Association of National Accountants of Nigeria (ANAN), taxpayers and the general public.
The FIRS subsequently released an information circular to intimate the relevant stakeholders and the general public. The circular has therefore clarified the roles of licensed members of the CITN, the ICAN and the ANAN, in relation to the filing of tax returns on behalf of taxpayers for a fee, in accordance with their legal framework as set out hereunder.
2.0 LEGAL FRAMEWORK AND KEY HIGHLIGHTS
- Section 8 (1) (u) (2) of the Federal Inland Revenue Service (Establishment)Act 2007 (as amended) provides that the Service (FIRS) may, from time to time, specify the form of returns, claims. statements and notices necessary for the due administration of the powers conferred on it by the Act.
- Section 55 (1 and 6) of the Companies Income Tax Act Cap C21, LFN 2004 (as amended) provides for the form of Returns with the FIRS and structure of provisional accounts as well as the requirement for a representative knowledgeable in the field of taxation to respond to queries on tax matters.
- CITN by virtue of its establishment Act, Cap C10, Vol 2, LFN 2004 and according to Section 1, 16, and 20, is charged with the regulation and control of the taxation profession in all its ramifications in Nigeria.
- Sections 14 and 19 of the Institute of Chartered Accountants of Nigeria (ICAN) Cap III, LFN 2004 provides for the establishment of the Institute and specifies when a person is deemed to practice as an Accountant.
- While Sections 1, 14, and 20 of the Association of National Accountants of Nigeria (ANAN) Cap A26, LFN, 2004 provides also for the establishment of the Act, when a person is deemed to practice as a public accountant.
- Relevant extant laws, regulations and Judicial pronouncements
The key highlights of the terms of the tripartite MoU brokered by the FIRS Chairman and signed by the three professional bodies on May 31, 2022, are as follows:
- Members of ICAN and ANAN who have been issued practicing licence by their respective bodies shall utilize the stamps and seals granted by their respective bodies in signing audited financial statements, when hired for a fee;
- Members of CITN who have been issued practicing licence by CITN shall utilize the stamps and seals in signing tax computations to be utilized for filing tax returns, when hired for a fee;
- CITN will grant ICAN and ANAN members direct membership of CITN, that is, without taking examinations, provided that this provision does not preclude the persons granted direct membership from complying with the rules and regulations affecting other members of CITN;
- The three bodies shall continue to cooperate to find areas of convergence for purpose of holding joint training and programs for their members, and generally standardizing the requirements for qualification in their areas of convergence;
- Members of CITN including those that are also members of ICAN and ANAN that intend to practice taxation shall apply for and be granted the practicing license of CITN upon the fulfillment of conditions set out by the Council of CITN;
- All parties agreed to withdraw any litigation that they have initially initiated on matters relating to the subject of the MoU and shall cause any of their members that have initiated such litigation to withdraw such, whether the litigation is before the trial court or on appeal;
- Any party who fails to comply with any of the provisions of the MoU, either directly or through its members, shall lose the benefits contained therein.
The signing of the MOU is meant to provide an atmosphere in which the bodies are meant to operate seamlessly to support what FIRS does and also contribute to the improvement of the Country’s position on the ease of doing business index.
3.0 FIRS MODE OF OPERATION OF THE MEMORANDUM OF UNDERSTANDING
The MoU as agreed by all parties shall be in operation from the 1st day of October, 2022, FIRS will operate the MoU under the following terms:
- All tax practitioners, working for a fee, must be licensed by CITN and shall sign and affix their customised CITN Stamp or Seal on the tax computations appended to tax returns before filing;
- FIRS shall only accept tax computations included in tax returns submitted by a tax practitioner who had been hired for a fee, if signed and affixed with the stamp or seal issued by the Chartered Institute of Taxation of Nigeria (CITN);
- FIRS shall only accept audited financial statements signed and affixed with the customised seal or stamp issued by either the Institute of Chartered Accountants of Nigeria (ICAN) or the Association of National Accountants of Nigeria (ANAN) as the case may be;
- Where a taxpayer chooses to file its tax returns without engaging the services of a tax practitioner, FIRS shall accept such tax returns as self-filing by the taxpayer; and
- Each of the professional bodies shall submit to FIRS, a list of their accredited practicing members not later than the end of February annually. The FIRS shall publish the list of accredited Auditors and Tax Practitioners for the purpose of filing Tax Returns, not later than 31st March of every year.
Over the years, FIRS has demonstrated its desire in ensuring an all-inclusive tax administration in Nigeria while CITN will continue to support the policies and guidelines from FIRS in achieving paradox shift in the Nigerian Tax System. It is a new dawn in terms of the conduct of the members of the Institute and high level of professionalism is expected from all the respective parties involved. Full compliance to the signed MoU will surely promote professional ethics and upholding of practice standards of the three professional institutes. Finally, FIRS will be able to identify members in practice from the bodies which will in turn help to eliminate quackery from the tax system as only the stamps and seals of these bodies will be accepted and recognized.
Finally, all members of the Institute in active tax practice are enjoined to apply for their Practice Licenses if they are yet to so, while those with the old CITN stamps and seals are strongly advised to get in touch with the membership desk (email@example.com) of the Institute on how to go about changing their old stamps and seals for the personalised self-adhesive stamps and new logo seals before October 01, 2022.