Tax & Business Matters - Nigeria

PwC Tax Academy - Practical guide and strategies for managing Tax Audit and Investigation

The FIRS' revenue target for 2023 has increased to N12trn (after achieving N10.4trn in 2022). Therefore, the tax authorities are expected to intensify focus on generating revenue from back duty taxes and assessments. However, tax audits and investigations by the authorities should not make you worry or disrupt your business operations.

PwC is pleased to invite you to our virtual Tax Academy session titled "Practical Guide and Strategies for Managing Tax Audit and Investigation” scheduled to hold on Tuesday, 21 February 2023 between 9am to 1pm. In this session, we will;

• Gain an understanding on how to manage the tax audit and investigation process
• Understand dispute resolution mechanisms, an dhow to leverage them
• Discuss practical issues in the Nigerian tax audit space

You can click here to register for this and other sessions. Our training fee is NGN120,000 only (exclusive of VAT at 7.5%).  

TAT rules that Information Technology (IT) Levy does not apply to network facilities providers

INT Towers (the “Company” ) carries on the business of infrastructure sharing and colocation, i.e operates telecom facilities ( e.g masts, towers and related equipment) and gives telecom companies access to these facilities. The Company drew the attention of the Federal Inland Revenue Service (FIRS) to the automatic assessment of IT Levy (1% of its Profits Before Tax) as part of the Company’s 2021 tax returns filed on the FIRS’ e filing platform ( TaxPro Max).

After reconciliation meetings, the FIRS issued an official notice of assessment in this regard, which the Company objected to. The FIRS subsequently issued a Notice of Refusal to Amend this liability, after which INT filed an appeal at the TAT.

The Tribunal ruled that INT is a network facilities provider and not a telecoms company. Hence, the Company is not liable to pay the NITDA levy of 1% of PBT.

Many taxpayers have concerns about the automatic computations and assessments by the TaxPro Max system which may infringe on taxpayers’ right to self assessment. The system should be made flexible to allow taxpayers to assess themselves based on their interpretation of the law, and the FIRS should continue to improve on its responsiveness to resolving taxpayer issues with the system such as undue imposition of interest and penalties, uploading and utilising WHT credit, and so on.

Please see our Tax Alert on tis, in addition to the TAT judgement below: 

Download PwC Tax Alert -TAT rules that Information Technology (IT) Levy does not apply to network facilities providers

Download TAT rules on NITDA-INT v FIRS

 

TAT says certain legal costs and employee remuneration are not deductible

Stanbic IBTC Bank Plc (“Stanbic” or the “Bank”) set up a reward scheme (the “Programme”) for exceptional employees. The Programme entailed subsidising the interest on mortgage loans taken by qualifying employees, and therefore the Bank recognised these costs in its books. The FIRS disallowed expenses relating to the Programme.

Also, the Bank incurred legal expenses in respect of a Court of Appeal (COA) suit against the Financial Reporting Council of Nigeria (FRCN) and the National Office for Technology Acquisition and Promotion (NOTAP). The FIRS also disallowed the legal costs on the grounds that they were avoidable and were not necessarily incurred in the course of the Bank’s business.

In an interesting turn of events, the Tribunal ruled in favour of the FIRS and held that the Bank was liable to the additional assessments in both instances.

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

Download TAT says certain legal costs and employee remuneration are not deductible

Download STANBIC IBTC V FIRS