The obligation to account for taxes due on withdrawal of voluntary pension contributions (VPC) was made clearer in the judgement delivered yesterday by the Tax Appeal Tribunal (TAT) on a case between Nexen Petroleum Nigeria Limited (Appellant) and Lagos State Internal Revenue Service (Respondent). The TAT ruled in favour of the Appellant, that the obligation to recover taxes due upon withdrawal of VPC by employees is on the Respondent, hence relieving employers of any tax obligation with respect to VPC.
Further, the judgement also confirmed that VPC is an allowable deduction for the purpose of calculating Pay-As-You-Earn taxes due from employees.
The judgement by TAT was based on the provisions of Section 20(1) of the Personal Income Tax Act 2011 (as amended), and Sections 4.3 and 10 of the Pension Reform Act 2014 (as amended). We will share a detailed analysis of the ruling in our Newsletter in due course. Please click here to access our previous publication on this issue.