Tax & Business Matters - Nigeria

The new excise duties on telecommunications services: What you need to know

The Federal Government of Nigeria recently announced excise duties at 5% on telecommunications services in Nigeria, as part of the 2022 Fiscal Policy Measures and Tariffs Amendments Order. This is further to recent amendments to the Customs and Excise Tariff, Etc. (Consolidation) Act which included telecommunications services provided in Nigeria, as subject to excise duties.

Although there are indications that the tax may have been suspended according to the Minister of Communications and Digital Economy, the legal process required to suspend the tax is yet to be activated or published. Therefore, from a legal perspective, the tax is still applicable and affected taxpayers need to take steps to ensure compliance. 

Our Tax Alert sets out key things you should know about the excise duties either as an operator or user of telecommunication services in Nigeria. We have also highlighted relevant insights and grey areas which would need further clarification.

Please see our Tax Alert below:

Download PwC Tax Alert - New excise duties on telecom services_what you need to know

 

 

TAT rules on the applicability of Excess Dividends Tax on certain income, VAT on reimbursements, and taxpayers’ right to fair hearing

The Federal Inland Revenue Service (FIRS) audited Dangote Industries Limited (DIL or the “Company”) for the period 2013 - 2015 after which it assessed the Company to N10.98b in additional taxes. DIL disputed the assessment on the basis that the Company was not given fair hearing during the process. DIL also disputed the Excess Dividends Tax (EDT) assessments on the basis that EDT should not apply on the redistribution of dividends received from pioneer companies and from subsidiaries which have been subject to WHT (franked investment income). The FIRS subsequently issued a Notice of Refusal to Amend (NORA), after which DIL filed an appeal at the Tax Appeal Tribunal (TAT).

The TAT ruled that VAT should not apply on the reimbursement of costs paid on behalf of DIL by another entity, and subsequently recharged to the Company. Also, the distribution of dividends comprising franked investment income and dividends received from pioneer companies are exempt from EDT (even before this was specifically included in CITA in 2020). Recent tax law amendments may significantly impact similar transactions going forward.

Please see our Tax Alert on this, and the TAT judgement below:

Download PwC Tax Alert – TAT rules on the applicability of EDT on certain income, VAT on reimbursements and taxpayers’ right to fair hearing

Download DANGOTE IND- LTD- v- FIRS - JUDGMENT

 

 

FIRS issues circular on the administration of the NASENI Levy

The National Agency for Science and Engineering Infrastructure (NASENI) Act was recently amended to impose a levy of 0.25% of profits before tax of commercial companies and firms with turnovers of N100,000,000 in certain sectors, including banking, telecommunications, ICT, aviation, maritime, and oil and gas.

 

Although the law has been in existence, there were previously no clear guidelines on its administration. The amendment now clarifies that the levy is to be collected by the Federal Inland Revenue Service (FIRS), and the FIRS subsequently has released an information circular on the administration of the levy. However, there are a number of questions which need clarity.

Please see our Tax Alert on this, and the FIRS circular below:

Download FIRS issues circular on the administration of the NASENI Levy

Download INFORMATION CIRCULAR FOR THE ADMINISTRATION OF NASENI

 

PwC Tax Academy - "Legislation and Administration of VAT, WHT and other Transaction taxes: Tips for Navigating the Knotty Issues."

PwC's Tax Academy will be hosting a session titled "Legislation and Administration of VAT, WHT and other Transaction taxes: Tips for Navigating the Knotty Issues” on Tuesday, September 20 2022." 

Tax is a key source of revenue to the government and it's important that individuals and businesses have adequate knowledge of the laws surrounding taxes, the knotty issues in practice, lessons from decided cases, and emerging issues. This knowledge will aid in complying with the laws and dealing with practical issues that may arise as government focuses more on taxes to stem the rising budget deficits.

In this session, we will examine the legislation governing the administration of VAT, WHT, and other transaction taxes in Nigeria. We will also analyse the key issues arising from the implementation of the tax laws and discuss practical solutions to addressing them.

Attendance at this session attracts a fee. You can click here to register for this and/or other sessions online.