Broadly, there are two types of Tax Assessments: Self-Assessment and Administrative Assessment.
By Ado Mohammed Abubakar
1. Self-Assessment is where the taxpayer assesses himself by computing and remitting the applicable tax to the relevant tax authority.
Under Self-Assessment for individual taxpayers, we have 2 broad categories:
PAYE is for those in employment, which is computed, deducted, and remitted monthly to the relevant tax authorities by their employer.
Direct Assessment is for self-employed individuals and enterprises. They are expected to assess themselves and remit the tax to the relevant tax authority.
2. Administrative Assessment is where the tax authority assesses the taxpayer. It is usually used when a taxpayer fails to file a Self-Assessment or when the tax authority reviews the Self-Assessment and disagrees with the treatment of some items. There are 2 common types of administrative assessment:
Revised Assessment is used where the tax authority disagreed with some items in the self-assessment return. The taxpayer has the right to defend himself by providing documents to support his Self-Assessment.
Best of Judgment Assessment (BOJA) is a punitive assessment raised on those who failed to file a Self-Assessment. The tax authority estimates the tax liability based on information available to it. The taxpayer has a right to defend himself, but usually, a penalty and interest at the prevailing MPC rate will be added to the tax liability.
Do you still believe that Nigerian Tax Authorities will automatically debit your bank account after reading the above?
Ado Mohammed Abubakar, FCTI, FCA