Tax Matters - Nigeria

Nigeria's new national tax policy: A new dawn or another false start?

The national tax policy review committee has completed its assignment and yesterday submitted the revised National Tax Policy (NTP) to the finance minister. It is expected that the NTP will be approved by the Federal Executive Council and the National Economic Council before its implementation can begin. If properly implemented, the NTP should lead to a significant improvement in the Nigeria tax system.

The NTP contains measures designed to:

• Address multiplicity of taxes and multiplicity of Revenue agencies
• Reduce income tax rates and compliance burden for Micro, Small and Medium Enterprises
• Improve Nigeria's ranking on the global ease of paying taxes index from the current 181 to top 50
• Encourage diversification, expand the country's tax base and improve Tax to GDP ratio

Read my article published in the Guardian Newspaper 4 October below for details.

NTP Article

Here is a copy of the revised NTP for your reference. Download Revised NTP 28 Sep 2016

PwC has published its annual Worldwide Tax Summaries - Corporate Taxes 2016/17

The latest compilation of our worldwide tax summaries has been published. This edition, which is one of the most comprehensive tax guides available, provides detailed information on corporate tax rules and rates in 155 countries worldwide.

The guide features recent changes in tax legislation and includes key information about corporate income taxes, deductions, group taxation, credits and incentives, withholding taxes, indirect taxes, and tax administration. It is available in four formats including a hard copy book, a digital and mobile version.

See link here for the online version: www.pwc.com/taxsummaries

The reduced withholding tax rate of 2.5% on construction activities has been reversed

As a result of the low profit margin in the construction industry, resulting in perpetual excess WHT credits, the former minister of finance granted a reduction in WHT rate from 5% to 2.5%. The amendment to the WHT Regulation was issued through an official gazette with an effective date of 1 January 2015. The reduced rate was applicable to all aspects of building, construction and related activities (excluding surveys, designs and deliveries).

This reduced rate has now been reversed by the current minister of finance on the recommendation of the FIRS.

Read our tax alert for more Download PwC Tax Alert_Withdrawal of reduced WHT rate on construction_Sep 2016

FIRS moves to restrict carry forward of WHT credits

The Federal Inland Revenue Service (FIRS) recently denied some companies seeking to utilise withholding tax (WHT) credit notes carried forward from prior years against their 2016 income tax assessments. The position communicated by the FIRS is that only the WHT credit notes relating to the year of assessment being filed will be granted.

In addition, the FIRS directed taxpayers with unutilised WHT credits relating to prior years to apply for a refund which would require a tax audit. 

Given the challenges associated with obtaining tax refunds from the FIRS, the directive for taxpayers to apply for refunds rather than utilise their credit against future taxes is against the clear wordings and intent of the law.

Read more here Download PwC Tax Alert_Restriction of WHT Credits