Tax & Business Matters - Nigeria

FIRS extends tax amnesty for SMEs, no extension for others!

The tax amnesty recently introduced by the Federal Inland Revenue Service came to a close on 24 November 2016. However, the FIRS has extended the window till 31 December 2016 only for members of the National Association of Small and Medium Enterprises (NASME) who are to collate all applications received from their members and forward to the FIRS not later than 31 December 2016.

Below is a copy of the public notice for your information. 

Download Clarification on extension of FIRS Waiver

Proposed Changes to Foreign Exchange Rules

The Nigerian Law Reform Commission has proposed various amendments to the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act. The Bill contains far reaching proposals some of which are good but require more careful considerations to avoid possible loopholes and prevent unexpected consequences. For instance, the fine of five million naira for CBN staff involved in foreign exchange trading is unlikely to be a deterrent where the potential gain far exceeds the likely penalty.

Overall the Commission needs to engage extensively with key stakeholders to ensure that the proposals achieve the desired objectives and not further complicate the current challenges in the foreign exchange market.

Below is our Regulatory Alert for your reading pleasure. 

Download PwC Regulatory Alert_Proposed changes to foreign exchange rules_Nov 2016

Companies Income Tax Act amended to grant more incentives for investment in infrastructure

The Companies Income Tax Act (Amendment) Bill 2015 which seeks to increase the incentives available to companies that invest in public infrastructure in the course of their business has been passed by the National Assembly. In addition, the eligibility threshold will be reduced to enable more companies qualify.

It is not clear how well these proposed changes are based on empirical data given the very little uptake by companies since the incentive was introduced decades ago. The expected benefit from the incentive should also be measured against the associated cost and revenue loss. It is also important to ensure sufficient coordination among government agencies to align different initiatives including the ongoing comprehensive review of tax incentive regime.

Read our alert below for further insights. Download PwC Tax Alert_ CITA to grant more incentives_Nov 2016

Also passed by the National Assembly is the VAT Amendment Bill 2015. Read our earlier alert on the proposed VAT changes here.

  

Court of Appeal Decision on Applicability of Stamp Duties on Bank Deposits: Further details!

Sometime in 2013, the Nigerian Postal Agency [NIPOST] entered into an agreement with an agent to collect from banks, the sum of N50 as stamp duty on all receipts including electronic bank transfers and teller deposits of N1,000 or more.

The parties agreed the new rate on the basis that the Stamp Duties Act (which imposes N1.50k for receipts with a value of not less than N40) had been amended by a ‘Federal Government Financial Regulations 2009’.

Many of the banks argued that the amendment was not in line with the law and therefore refused to charge and remit the N50 stamp duty to the agent. To compel compliance the agent successfully sued all 22 banks at the Federal High Court. In another suit, the agent also successfully sued the Central Bank of Nigeria [CBN], directing the CBN to compel the banks to comply with collection of the stamp duties. Following the decision, the CBN issued a circular directing banks to comply.

Dissatisfied with the earlier decision, one of the banks challenged the decision successfully at the Court of Appeal. Read our alert for further details and get a copy of the Court of Appeal judgment below.

Download PwC Alert_Court of Appeal says no stamp duties on bank deposit 

Download Financial Regulations 2009

Download SCBN v. Kasmal & 22 Ors- Judgment of CA and in conlsolidated Appeals CA-L-437A to 437U-2014

Why the new Codes of Corporate Governance were suspended

The Federal Government through the Minister for Trade, Investment and Industry recently suspended the Codes of Corporate Governance issued by the Financial Reporting Council of Nigeria pending when some queries raised are answered.

Check out our alert for details. Download PwC Regulatory Alert_FG suspends FRCN Code

Stop Press! Further update on FIRS tax amnesty

Subsequent to our recent tax alert on the ongoing tax amnesty, we have received further update from the FIRS regarding eligibility for the waiver.

The initial position of the FIRS that the amnesty was applicable only to taxpayers who have been audited and issued assessments has now been revised to cover voluntary disclosures and self assessments. This revised position is more consistent with the content of the FIRS Public Notice on the subject matter and the general intent of a tax amnesty.

Prior to seeking our initial clarification, some FIRS officials in various offices had informed us that the amnesty was only applicable to taxpayers who have assessments from FIRS, and this was specifically confirmed by the Office of the FIRS Chairman.

In view of the latest update, taxpayers who wish to make voluntarily disclosure should go ahead provided that all other conditions stated in the FIRS Public Notice and articulated in our tax alert have been met. The position of the FIRS on other issues relating to the amnesty remain unchanged at this time.

FIRS clarifies tax amnesty

Following the recent declaration of tax amnesty by the Federal Inland Revenue Service, a number of questions arose concerning the amnesty including eligibility, scope and the process involved.

We therefore sought and have now obtained clarifications on the grey areas. These include the fact that the tax waiver programme is only applicable to taxpayers who have been audited and issued assessments that include penalties and/or interest for the specified period.

Those not yet audited or still undergoing audit are not eligible, and no refunds or credits will be granted for penalties and interest already paid for the specified period. 

Read our tax alert for more: Download Tax Alert_FIRS clarifies tax amnesty_Nov 2016