Tax & Business Matters - Nigeria

CBN’s foreign exchange restriction for imports through third parties: Tax and other considerations

The Notice, dated 24 August 2020 (and effective immediately) was issued as part of CBN’s efforts to curtail the strain on the country’s foreign exchange reserve, on the basis that Buying Agents introduce additional layer of costs and may be involved in transfer mispricing, among others.

The CBN stated that the directive is “to ensure prudent use of our foreign exchange resources and eliminate incidences of over-invoicing, transfer pricing, double handling charges, and avoidable costs ultimately passed to Nigerian customers”.

Read our alert here for details:

Download Tax Alert_Restriction of forex for imports through Buying Agents_Sep2020

Tax Appeal Tribunal delivers conflicting decisions on whether VAT is chargeable on property leases

In Chief J.W. Ellah & Sons Company Ltd v FIRS and Essay Holdings Ltd v. FIRS decided by the Tax Appeal Tribunal (TAT) in Benin and Lagos Zones respectively, the TAT delivered conflicting decisions on whether commercial leases are subject to Value Added Tax (VAT). Both zones also adopted different approaches to the role of Information Circulars in interpreting statute.

The appeals were contested under the VAT Act, LFN 2004 (VAT Act, 2004). Prior to the amendments by the Finance Act 2019 (FA 2019), there was no clear definition of goods and services which further added to the controversy regarding the VAT status of property leases.

Taxpayers interested in this case may need to wait and monitor the outcome if the judgment is appealed before changing their current practices or considering any steps regarding past treatments.

Read our alert for further details:

Download PwC Tax Alert - TAT Issues conflicting decisions on VAT on Commercial leases_Sep2020

Nigeria commences automatic exchange of taxpayer information

The FIRS has shared communications with taxpayers regarding the commencement of exchange of information with other countries. The communication reads as follows: 

“We are delighted to inform you that the AEOI-CRS System Portal has gone Live!

All Reporting Financial Institutions are expected to file reports on or before 30^th September 2020.

The designated official of each Financial Institution is required to enroll on the AEOI-CRS System Portal, as a Primary user, to enable the Financial Institution, file its CRS reports.

To enroll as a Primary user and have access to related AEOI-CRS documents, please visit the FIRS website at www.firs.gov.ng and navigate the menu tab on Automatic Exchange of Information.”

You can also watch this interview with Mr. Gbonjubola, Head of Tax Policy and Mr Edga Head of AEOI at FIRS for further details.