Tax & Business Matters - Nigeria

The new Pension Reform Act 2014 has been gazetted

The uncertainty regarding the commencement date of the new pension law signed by President Goodluck Jonathan on 1 July 2014 has now been laid to rest with the gazetting of the law. Based on the gazetted copy dated 2 July 2014 (see below), the commencement date of the new law is 1 July 2014.

By implication, affected employers would have to implement the law immediately and true-up any shortfalls in their contributions for July 2014 to bring their compliance up to date.

All other grey areas in the new law remain unresolved (see article on "the good, the bad and the ugly" for details).

Download Pension Reform Act 2014_Gazetted

Pension Article 

Nigerian companies now liable to income tax at 60%

On 18 July 2014 the Tax Appeal Tribunal (Tribunal) in the case of Oando PLC v the Federal Inland Revenue Service (FIRS) decided in favour of the FIRS regarding the application of Section 19 of the Companies Income Tax Act on “excess dividends” tax.

In essence, under Section 19 any dividend paid in the instances set out in the section will be treated as taxable profits subject to tax at the rate of 30%. If applied without measure, this invariably means an effective corporate income tax rate of 60% where previously taxed retained earnings are distributed, and at least 30% in all other cases including exempt income and gains taxable exclusively under the Capital Gains Tax legislation.

The decision creates more uncertainty on the issue of excess dividends tax more so since the Tribunal did not apply certain deductions and inferences from an earlier decision of the Federal High Court between the same parties and on almost identical facts.

For details please see below my article published in the Guardian today on pg 26 and our tax alert.

Download CIT Rate now 60%

Download PwC Tax Alert - New TAT decision on excess dividend tax

Is it a tax or a levy?

Specifically, the major distinction between income taxes and levies is that the former is based strictly on taxable profit while the latter is payable without regard to taxable profit.

If you wish to know more, please read my article published by BusinessDay to find out about the new changes introduced by IFRIC Interpretation 21 on Levies.

Download Is it a tax or a levy 

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Taxation of foreign companies operating in Nigeria

… for a government seeking to simplify the tax system and improve tax compliance, it is conventional wisdom that the harder we make tax compliance, the more we provide the incentive for non-compliance and outright evasion.

Read my article published by the Guardian Newspaper (uploaded below) to find out about matters arising from the current deemed profit basis of taxation, proposed changes by the tax authorities and the way forward.

Download Foreign companies taxation 

August 2014 Tax Calendar

I have uploaded below our tax calendar for August for your use.

Download Tax Calendar_August 2014