[DOWNLOAD] FIRS Makes Clarification On VAT Payment On Services Of Financial Institutions

**Lists Vatable and non-Vatable items

The Federal Inland Revenue Service, FIRS, has issued a notice making clarification on the pay of Value Added Tax, VAT, on services of Financial Institutions.

According to FIRS, financial institutions include any bank, individual, body, association, or group of persons, whether corporate or unincorporated, licensed under Banks and Other Financial Institutions Act (BOFIA) and any other related Act which carries on the business of a discount house, finance company, money brokerage and those whose principal objects include factoring, project financing, equipment leasing, debt administration, fund management, private ledger services, investment management, local purchases, order financing, export finance, project consultancy, financial consultancy, pension fund management and such other business as the Central Bank of Nigeria, Nigeria Deposit Insurance Corporation, Pension Commission and other regulatory body may, from time to time, designate.

FIRS says Financial institutions charge commissions, fees, or other charges for services rendered to their customers which are liable to VAT. The provision of loans and advances does not, in itself, constitute a transaction liable to VAT.

The interest chargeable on the loans and advances is not liable to VAT. However, ancillary services such as documentation and perfection of loan or overdraft agreements are subject to VAT.

Fees or commission earned by insurance companies’ brokers, agents, loss adjusters, surveyors, and other service providers in the insurance industry (including staff of the financial institution) for services rendered to insurance companies are liable to VAT. The burden of the VAT will be borne by the insurance company itself. However, the premium received on policies is not liable to VAT.

*Download — VAT On Financial Services