Tax & Business Matters - Nigeria

Yes! Brexit will affect you whether or not you live in the UK or the EU

The Brexit vote has not only shocked the EU and the rest of the world, it also left many citizens and residents of the United Kingdom themselves “fantastically stunned”. It is not surprising that millions of British people have now signed a petition requesting for another referendum. - Taiwo Oyedele

Also wondering how the new foreign exchange policy introduced by the CBN will affect tax? Read my article to find out more.

Download Brexit and CBN fx policy implications_June 2016

VAT (Amendment) Bill 2015: Taxpayers to pay much more for non-compliance

Now that Britain has voted to leave the EU, analysts are trying to figure out the implications of Brexit for not only the UK/EU but the global economy. This decision will also impact tax especially in the UE and UK.

Here in Nigeria, a proposed amendment to the VAT legislation that will have a significant impact has been passed by the House of Representatives. The Amendment Bill seeks a significant upward review of all the fines and penalties contained in the Value Added Tax Act.

While penalties ranged between NGN2,000 and NGN30,000 under the current Act, in the Bill the range of penalties is between NGN25,000 and NGN200,000. For tax evasion the Bill proposes an increase in prison sentences from a term ‘not exceeding’ 3 years to a term ‘not less than’ 3 years.

Read our alert to find out more Download PwC Tax Alert_ Highlights of VAT Amendment Bill 2015

 

FIRS launches new electronic platforms for tax payments

The FIRS in a move to improve tax compliance has launched three e-channels for tax remittance. If properly implemented some of the current challenges and inefficiencies encountered in processing tax payments will be reduced.

Find out more Download FIRS new e-payment platforms_June 2016

Guess how many Nigerians pay tax and how our government spends the money

Well, if your guess is as good as mine, then you will agree that the social contract is broken and needs fixing urgently.

According to the Joint Tax Board, there are ten million people (precisely 10,006,304) registered for personal income tax purposes in all the states of the federation including the FCT. Out of this, about 4.6 million or 46% are registered with the Lagos State Internal Revenue Service (LIRS) indicating an average of 153,000 or 1.5% per state for others.

Read my article in Guardian Newspaper for details Download Guess how many Nigerians pay tax_Taiwo Oyedele

Central Bank of Nigeria introduces electronic certificates of capital importation (e-CCI)

The Central Bank of Nigeria (“CBN”) recently communicated to banks, its intention to phase out physical certificates of capital importation and migrate to electronic certificates (e-CCI) for improved efficiency.

Read more Download Regulatory Alert - CBN introduces e-CCI

Any tax assessment that is not in line with the law cannot be final and conclusive

In Star Deep Water Petroleum Ltd v. Lagos State Internal Revenue Service, the Tax Appeal Tribunal (TAT) Lagos division held that an assessment that is not compliant with the law cannot become final and conclusive.

The TAT also held that Regulation 2(2) of the PAYE Regulations which requires a ‘manager’ to act in place of an employer by furnishing the relevant tax authorities with employees’ emoluments, deducting and remitting tax do not apply where the manager is not the one paying the employees’ emoluments.

Read our alert for further insights Download PwC Tax Alert_Assessments not in line with the law cannot be final & conclusive

 

 

Tax Tribunal agrees with PwC on deductibility of expenses incurred outside Nigeria

Section 27(i) of the Companies Income Tax Act disallows “any expense of any description incurred outside Nigeria for and on behalf of any company except of a nature and to the extent that the Board (“FIRS”) may consider allowable”.

PwC argued on behalf of the Appellant and the TAT agreed that section 27(i) does not apply to an expense that is incurred for the business and benefits of a company by itself but rather applies to expenses incurred on behalf of another company. The FIRS countered by submitting that the section applies to expenses incurred for the company and expenses incurred for another company.

Read our alert for more Download PwC Tax Alert_ Deduction of Expenses Incurred Outside Nigeria

Dividend from gas profit is liable to WHT but balancing charge is not liable to Education Tax

The Tax Appeal Tribunal (TAT) reaffirms previous decisions that interest on related party loans is tax deductible provided it satisfies arms-length principles. Also the TAT ruled that WHT is applicable on gas profits distributed as dividend but balancing charge should not form part of assessable profits for Tertiary Education Tax purposes.

Read more Download PwC Tax Alert_WHT on Gas Profit and TET on Balancing Charge

Tax Tribunal says sole costs for petroleum operations are tax deductible

“…when dealing with tax matters, the first port of call should always be the tax laws…”

In May 2016, the Tax Appeal Tribunal (TAT) sitting in Lagos ruled that parties in Production Sharing Contracts (PSCs) with the Nigerian National Petroleum Corporation (NNPC), can take tax deduction for sole costs, where the deduction of such expenses are permissible under the Petroleum Profits Tax Act (PPTA), regardless of the provisions of any contractual agreement.

Read our one-pager tax alert for details.

Download PwC Tax Alert_TAT says Sole Costs are Tax Deductible

 

Tax Appeal Tribunal Supports Tax Deduction for Modified Carry Arrangement Costs

Typically, a Modified Carry Arrangement is where an oil company finances petroleum operations on behalf of all parties to the contract including the NNPC and the oil company is expected to recover its cost partly through tax deduction and partly from oil production.

The contention was whether an oil company can claim tax deductions for cost incurred under a Modified Carry Arrangement. The case was brought before the Tax Appeal Tribunal (TAT) by an International Oil Company (IOC) against the Federal Inland Revenue Service. The TAT ruled that the IOC was entitled to make deductions for tax purposes in computing its taxable profit in accordance with the provisions of the Petroleum Profits Tax Act.

Download PwC Tax Alert_ TAT on Modified Carry Deductions