Tax & Business Matters - Nigeria

National Assembly Passes 2016 Budget

The National Assembly has passed the 2016 Budget of the federal government of Nigeria. The Senate approved the $38 per barrel, daily production of 2.2 mbpd, and exchange rate of N197 to the dollar as proposed by the Executive. The total budget approved is N6.06 trillion. 

Nigeria takes steps to approve the avoidance of double taxation agreements with Sweden, South Korea and Spain

Nigeria’s President has presented a bill to the lawmakers to enact a law that will give effect to the avoidance of double taxation agreements (DTAs) entered into at different times between Nigeria and Sweden, South Korea and Spain.

The federal government of Nigeria signed the DTA with Sweden in 2004, with South Korea in 2006 and with Spain in 2009. However, these agreements are yet to become effective in Nigeria on the basis of the constitutional provision which requires such treaties to be domesticated through ratification by the National Assembly.

It should be noted that the more recent DTAs signed with Mauritius, the UAE and Qatar are yet to be presented for ratification.

FIRS to collect taxes on behalf of FCT Internal Revenue Service

The Federal Inland Revenue Service (FIRS) and the FCT Internal Revenue Service (FCT-IRS) have issued a joint public notice informing taxpayers and the general public that the FIRS will continue to administer and collect taxes due and payable within the FCT on behalf of the FCT-IRS. According to the statement, this is to ensure effective administration pending when the FCT-IRS commences full operations.

See copy of notice below and link to our previous alert on the establishment of the FCT-IRS.

Download Public Notice on Tax Collection for the FCT by FIRS

FCT IRS established

  

A social welfare Bill has been introduced by the National Assembly but how workable will it be?

A new Bill has been introduced by the National Assembly seeking to establish an Unemployed Youth, Elderly and Indigent Persons Sustainability Allowance Trust Fund to be financed by the proposed Communication Service Tax. The Fund will be managed and utilised for the emergency needs of Nigerians including payments of stipends to the unemployed, subsidising infant drugs, hypertension drugs, diabetes drugs and other related matters.

Read our alert below for further details and see a copy of the Bill.

Download PwC Tax Alert_Social Welfare Bill_March 2016

Download Social Welfare Trust Fund Bill, 2015

 

Lagos state sets up a Rapid Tax Prosecution Unit, threatens jail term for evaders

The Lagos state government today announced the establishment of a Rapid Tax Prosecution Unit to aid the Lagos Internal Revenue Service (LIRS) in its drive to collect taxes. The unit would work closely with the Revenue Court which the Chief Judge of Lagos State recently agreed to set up.

The statement states that prosecution and jail term for defaulting taxpayers will be a tool that will be actively used to ensure full compliance. It was further stated that tax officers will be very aggressive in their collection of taxes and the public is hereby advised to cooperate with them because obstruction of these tax officers in their lawful duty can and will lead to prosecution.

Watch out for further details.

FIRS talks tough, to hold principal officers personally liable for non-compliance by companies

The Federal Inland Revenue Service (FIRS) has again issued a public notice to remind companies of their obligations to file tax returns and to do so on time (within 6 months of financial year end date). Those that are in default for past years are also required to bring their filing up to date in all cases within 14 days from today. FIRS threatens to hold principal officers of defaulting companies personally liable which may include fines and imprisonment. See notice here: Download FIRS Piblic Notice on Tax Returns_March 2016

Also recently, the FIRS has been posting "non-compliance stickers" in the office premises of companies considered to be in default of timely filing of returns or payment of taxes. Such stickers may not be removed without the approval of the FIRS Chairman after such defaults have been rectified. See sample here: View this photo

It is important to pay special attention to tax matters now than ever before. FIRS is not only talking tough, they are likely to act tough. While one may question the legitimacy of these measures, it is perhaps less costly and more sensible to avoid getting into the Lion's Den than hoping to come out unscathed.

Plans to introduce a new tax on communication services underway

A new Bill to impose a Communication Service Tax (CST) is being introduced by the National Assembly. The CST will be levied on service fees payable by users of electronic communication services at 9% and will be borne by the customers. If the Bill is enacted into law, it will mandate service providers to file monthly tax returns with the FIRS with strict penalties for non-compliance.

The categories of communication services liable to the tax include voice calls, SMS, MMS, Data and Pay TV.

Read our alert below for details. Also available is a copy of the bill for your reference.

Download PwC Tax Alert_Communication Service Tax

Download Communication Service Tax Bill 

Why the future of oil may be very different from its past

“The Stone Age did not end for lack of stone, and the oil age will end long before the world runs out of oil" - Sheikh Ahmed Zaki Yamani, former Oil Minister of Saudi Arabia

In my view, Nigeria did not move away from oil, rather it was oil that moved away from us. The former would have meant that we now have a diversified economy that is capable of generating sufficient non-oil revenue and foreign exchange receipt to plug the hole created by dwindling oil prices.- Taiwo Oyedele

Read my article published in today's BusinessDay for insights on what the future holds for the oil industry.

Download The future of oil_Taiwo Oyedele PwC