What is a tax return?
A tax return is a document taxpayers are required by law to accurately complete and send to NRA on a regular basis. This document provides details of taxpayers’ activities such as their taxable income, allowable expenses, rental income, capital gains and all other earnings and expenditure for a particular tax year. NRA issues tax returns forms to help taxpayers provide the required information with ease.
Why is it important to file a tax return?
- It gives NRA an idea of whether or not your business is active or growing
- it helps the NRA to know the level of business activities for a tax period
- It helps the taxpayer to be able to pay the correct amount of tax or make tax claims/refunds
- It helps NRA to correlate all your tax activities for the year ending and see if for example what you have imported equals what you have sold including closing stock and value addition
- it helps NRA calculate tax liabilities/claims with accuracy
- it helps GST registered businesses claim tax refunds or utilise their credits
Who should file a tax return?
All businesses registered by the Office of Administrator and Registrar General; they include:
- Sole proprietors
- Public enterprises / parastatals
Individuals who earn income from any source must file a tax return.
Types of returns:
- Income Tax Returns—are filed on a yearly basis(90 days after the end of the year of assessment)
- GST Returns—are file to provide information on the net difference between GST paid on input and GST charged on output. This must be submitted at the end of the month following the transactions
- Withholding Tax Returns—are filed 15 days after the end of the month
- PAYE Returns— are filed 15 days after the end of the month of payment of salaries and allowances
- Payroll Tax Returns—are filed at the end of the first month of each calendar year of assessment
Penalties for default:
The following penalties will apply upon late submission of returns and payment of taxes.
- Income Tax :
- Corporate/trade tax—late filling: Le5, 000, 000.00 plus 10% of the tax payable
- PAYE and other withholding taxes—interest rather than penalties are levied on such:
- Between 1-30 days— 10% of the tax payable
- Between 31-90 days—15% of the tax payable
- Between 91-180 days— 20% of the tax payable
- Above 180 days—25%
- GST:Late filling: Le 1, 000,000.00 or 5% of the tax payable (whichever is higher)
- Rental Income Tax : 35% of tax payable
- Payroll Tax—25% of tax payable