Tax & Business Matters - Nigeria

Companies operating in Nigeria may be liable to turnover tax under the NASENI Act

NASENI was established in 1992 by the Federal Government of Nigeria. The Agency’s mandate is to create an enabling, knowledge-driven environment for local mass-production of standard parts, goods and services required for the nation’s science and technology advancement.

The enabling legislation for the Agency is the NASENI Act (“the Act”).

 

One of the ways in which the Agency is to be funded is through a levy of 0.25% of turnover of commercial companies with turnover of at least N100m. The President has directed the FIRS to collect the levy from eligible companies. 

See our alert for further information:

Download PwC Tax Alert_Presidency directs the FIRS to implement tax collections for NASENI_April 2021

Tax Compliance Alert - Common Reporting Standards

The CRS Regulations became effective on 1 July 2019 and requires Reportable Financial Institutions (RFIs) to submit electronic information returns (i.e. reports on specified financial information of certain persons) to the FIRS on an annual basis. The compliance deadline is 31 May of the year following the calendar year to which the returns relate. 

The 2020 information returns for RFIs, are due on or before 31 May 2021. The administrative penalties for non-compliance are:

• Failure to comply with the CRS obligations, attracts a penalty of ₦10 million and ₦1 million every month the failure continues;
• Failure to file information return: ₦10 million in the first month and ₦1 million every month the failure continues;
• Filing false or incorrect information returns: ₦5 million and any other penalty prescribed in the Act.

Read our previous publications on the subject here.

 

FIRS issues Public Notice on deployment of automated tax administration solutions

The Finance Act 2020 amended Sections 25 & 26 of the FIRS Establishment Act, granting the FIRS powers to:

• deploy proprietary or third party Payment Processing Companies (PPCs) or digital platforms as agents to collect taxes due on international transactions in the supply of digital services.
• deploy technology to automate the tax administration process including assessment, collection and information gathering, provided that it gives the taxpayer a notice of 30 days.
• receive assistance in the collection of revenue claims or other tax matters relating to agreements between Nigeria and other countries or bodies.

 

Section 26 of the FIRSEA was also amended to mandate taxpayers to grant the FIRS access to relevant information in the taxpayers’ devices or cloud computing facilities. Refusal to allow the FIRS connect to the taxpayer’s system attracts a penalty of N25,000 in the first month and N10,000 for every subsequent month in which the default continues.

Read our alert for further details Download PwC Tax Alert - FIRS issues Public Notice on the Deployment of Automated Solutions

Unlocking value from the Tax Function in Nigeria's Financial Services

The highly dynamic local and global tax environment requires a careful examination of today's tax function. Tax functions may need to change to better manage risks, address capability gaps, and create value for their organisations. 

The need for organisations to demonstrate good tax governance places greater responsibility on the tax function like never before. 

In our survey, we polled major industry players in the Nigerian FS Industry and analysed their responses. Our survey report, titled Tax Function Effectiveness - Unlocking value from the Tax Function in Nigeria's Financial Services, highlights the various areas that may be impeding the tax function's transformation target with recommendations on steps to take in order to achieve an optimal tax function.

Copy of report here: Download Financial Services_Tax Function Effectiveness_PwC