Tax & Business Matters - Nigeria

Insights and perspectives on the Securities and Exchange Commission's new rules on Digital Assets

Nigeria's the Securities and Exchange Commission’s (SEC) recently released New Rules on Issuance, Offering Platforms and Custody of Digital Assets.

In line with the Rules, persons that intend to conduct initial digital asset offerings must submit an Assessment Form and draft White paper to the SEC to determine whether the digital asset is a security. The Rules allow the SEC to reject certain applications, prescribe a limit on the funds that can be raised by issuers within certain periods, among others.

One key issue remains the lack of harmony across relevant regulators, including the Central Bank of Nigeria, fiscal and tax authorities.

Read our article on the subject and a copy of the SEC Rules:

Download Insights and perspectives on the Securities and Exchange Commission's new rules on Digital Assets

Download SEC Rules on Issuance Offering and Custody of Digital Assets

FIRS clarifies Nigeria’s refusal to endorse the OECD 2 pillar agreement

The Federal Inland Revenue Service (FIRS) recently issued a Public Notice highlighting Nigeria’s rationale for not yet signing off on the OECD’s 2 Pillar Solution (the “Agreement”) for taxing digital companies. 

Some of the reasons put forward by the FIRS include:

1. MNEs are required to have annual global turnover of €20bn (about N9trn) and profitability of 10%, to be subject to the taxing rules in the Agreement. This threshold should have been met for 4 consecutive years.
2. For MNEs to be subject to CIT in Nigeria, such MNEs must have generated €1m in turnover in the relevant year. 
3. The Agreement provides for disputes to be resolved by an international arbitration panel, and not under the country’s judicial system. 

According to the FIRS, most MNEs that operate in (or with) Nigeria do not meet these criteria and would consequently fall outside the tax net. The FIRS also stated that resolving disputes outside Nigeria may not be favourable to Nigerian companies, and would imply significant legal and other incidental expenses.

Please see our Tax Alert and the FIRS Public Notice here:

Download Tax Alert - FIRS Clarifies Nigeria’s refusal to endorse the OECD 2-Pillar agreement

Download FIRS Public Notice - Nigeria does not endorse the OECD Tax Agreement

TAT confirms that assessments are final following failure to object within time

In 2 recent judgments delivered by the Tax Appeal Tribunal (the “Tribunal”) sitting in Lagos, the Tribunal considered the status of assessments raised by the FIRS which had become final and conclusive following failure of the separate taxpayers to object within the 30 day timeline stipulated by law. 

A company continues to exist until it is wound up. Dormant and other inactive companies should ensure continued compliance with relevant tax obligations, and that there is a system for responding to correspondence from the tax authorities.

Please see our Tax Alert below:

Download PwC Tax Alert - TAT confirms that assessments are final following failure to object within time