Tax & Business Matters - Nigeria

Lagos IRS issues clarification on what constitutes “reasonable removal expenses” for the purpose of tax exemption

There is no prescription in the labour law regarding removal expenses and relocation allowances payable to or on behalf of an employee that changes the location of residence for work purposes. As such, relocation allowance and removal expenses incurred by or for an employee to take up employment or move to a new employment location is usually guided by staff policy or at the discretion of the employer.

The Personal Income Tax legislation exempts from tax the costs associated with an employee’s move to take up new employment or relocate to a new employment location. However, for such expenses to be exempt, they must be deemed as reasonable (which is not defined).

Read our alert for further details. 

Download Tax Alert_Reasonable Removal Expenses_Aug2017

Download LIRS Public Notice on Reasonable Removal Expenses_Aug2017

 

Tax authorities issue public notices on abuse of voluntary pension contribution scheme

Highlights of the public notice

Limit to Contribution - The tax authorities are seeking to limit the amount that can be made by an employee as VC to one-third of the employee’s salary based on the provisions of S.5(7) of the Labour Act.

Tax on withdrawals from voluntary contributions - Payments made by the Pension Fund Administrators (PFA) on account of VCs that do not meet the conditions for withdrawal or appear to have been arranged purposely as a means of tax planning may be deemed as artificial transactions. Based on S.17 of the Personal Income Tax Act, such may be disallowed for tax purposes thereby nullifying the exemptions previously claimed.

Read our alerts for more details:

Download PwC Tax Alert_JTB Notice on Abuse of Pension Contribution_Aug2017

Download PwC Tax Alert_LIRS Notice Voluntary Pension Contribution_Aug2017

Download LIRS Public Notice on Voluntary Pension Contributions_aug2017

Kano State introduces Consumption Tax

The Kano State government recently introduced a 5% consumption tax payable on the consumption of goods and services in any hotel, restaurant, eatery, bakery, takeaway, suya spot, shopping mall, store, event centre and other similar businesses within the State.

Read our alert for more.

Download PwC Tax alert_Kano State Consumption Tax_Aug2017

Nigeria Signs Multilateral Instruments to Curb Tax Avoidance and Evasion

Yesterday (17 August 2017), Nigeria became a signatory to two major international multilateral instruments to address tax avoidance and evasion. These are the OECD’s Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (“Multilateral Instrument” or “MLI”) and the Multilateral Competent Authority Agreement for the Common Reporting Standard (CRS MCAA).

Read our alert below for more:

Download PwC Tax Alert_Nigeria signs MLI and CRS_Aug2017

National ID numbers required for International Passport applications from 2018

The ​Nigeria Immigration Service (NIS) recently announced that effective 1 January 2018, all applications for Nigerian passports (including renewals) would only be processed for applicants with a National Identification Number (NIN) issued by the National Identity Management Commission (NIMC). This applies to all passport applications within and outside Nigeria. The Comptroller General ​(CG) ​of the NIS, Mr. Mohammed Babandede, cited the harmonisation of data and ease of business in Nigeria as the reasons for this directive.
 
Based on the above, applicants would no longer need to have their biometric data captured when they apply ​f​or passports as these would be retrieved from the NIMC database.​
 
​Kindly visit any of the enrollment centres or passport offices to get a NIN if you are yet to do so.

The list of pioneer industries has been amended and suspension on grant of the incentive now lifted

A new Pioneer Status Incentive regime has been introduced. This includes addition of 27 new industries and removal of mineral oil prospecting and cement manufacturing.

See our alert below for more details.

Download PwC Regulatory Alert_Pioneer Status_August 2017

Nigeria signs double taxation agreement with Singapore

Nigeria and Singapore have signed a treaty for the avoidance of double taxation on income and capital gains tax between the two countries. To have the effect of law in Nigeria, the agreement must be ratified by the National Assembly, a process that is likely to take months or even years.

When operational, the treaty will provide enhanced reliefs to investors and businesses between both countries to eliminate or reduce the incidence of double taxation in addition to exchange of information and mutual assistance on tax matters.

Further details to follow.

Federal government approves a new list of industries eligible for income tax exemption

The Federal Executive Council has approved the inclusion of 27 new industries/products as eligible for pioneer status incentive, a corporate income tax exemption for up to 5 years. While mineral oil prospecting and production has been removed, new industries/products under consideration include Waste management/recycling; Oil refining and petrochemical; Regional shared service centres and Preservation of food crops.

The new scheme will also classifiy eligible companies in terms of new investments (greenfields) and expansions (brownfields) with varying qualifying criteria.

Watch this space for more details.