Tax & Business Matters - Nigeria

Nigeria's Finance Act 2023 - Insights series and sectoral analysis

Our interactive insights series publication highlights the key changes to 11 different laws through the recently enacted Finance Act (FA) 2023.

 

We have analysed the changes under the 5 focus areas of the FA 2023: tax equity reforms, climate change/green growth, job creation/economic growth, reforming tax incentives and revenue generation/tax administration, and broadly categorised them under:

1. Changes affecting the non- oil sector, and 
2. Changes affecting the oil and gas sector.

A copy of the publication and the signed FA 2023 are available here: 

Download Finance Act 2023_PwC insight series (interactive)

Download Finance Act 2023 - Final Signed by PMB

 

Nigeria’s FIRS issues assessments to international petroleum tankers and transport vessels

In a recent turn of events, the Federal Inland Revenue Service (FIRS) has begun to issue assessments to companies operating ocean-going petroleum tankers, based on intelligence obtained from regulators. The letters have been addressed to International Petroleum Vessel Companies (IPVCs) deemed to have “conducted business” in Nigeria. In the assessment letters, the FIRS either apply a 6% tax plus a 10% penalty and 19% interest on perceived freight income earned by the IPVCs from periods as early as 2011, or assume a treaty rate which is lower in most cases. In some of those assessments, the FIRS includes a tax on demurrage and detention charges earned on vessels chattered. There are no public details of how the income earned by the IPVCs was determined.

The FIRS stated that if the IPVCs assessed fail to submit their tax returns or make payments, it will be considered as tax evasion. The FIRS also mentioned that they are prepared to activate international cooperation mechanisms with foreign jurisdictions to enforce the tax payments.

International shipping companies need to evaluate whether they are required to register and pay taxes in Nigeria and determine the extent of their revenue subject to Nigerian tax. This is now more critical, considering new tax law amendments that require international shipping companies with Nigerian operations, to submit their Tax Clearance Certificates (TCC) upon request by the regulators.

Please read our Tax Alert below:

Download PwC Tax Alert- FIRS Issues Assessments to International Shipping Companies

 

TAT rules that the FIRS can appoint Non-Resident digital platform providers to fulfil VAT obligations on behalf of their customers

Bolt Operations OU (“Bolt” or “the Company”) is a Non-resident company (NRC) which operates a ride-hailing app to help drivers and restaurants to find customers to transport and deliver food respectively. The Company charges a commission to the drivers and restaurants subscribed to its ride hailing and food delivery platforms as its fee for using the app. The Company charges, collects and remits VAT on its commission. The drivers and food vendors provide their services directly to the customers and collect their cash directly from the customers or allow Bolt to collect their fees on their behalf for debit or credit card transactions. In summary, the people who procure food or book a ride on the Platform are customers of the drivers and food vendors, not Bolt.

In 2021, the Federal Inland Revenue Service (“FIRS ''), relying on section 10(3) of the VAT Act appointed the Company as its agent to charge, collect and remit VAT on the services provided by the drivers and restaurants who find customers using the Company’s app. Subsequently, the FIRS released a Guideline stating that supplies facilitated through the Company’s platform are to be deemed as supplies made directly by the Company. The Company objected to this appointment on the basis that there is no deeming provision in the Value Added Tax Act (as amended) (“the Act”) and it cannot fulfill the self-assessment obligations for another party.

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

Download BOLT v FIRS JUDGMENT-230602-184851 

Download PwC Tax Alert - TAT rules that the FIRS can appoint an NRC to fulfil VAT obligations on behalf of its customers

Fuel subsidy in Nigeria - issues, challenges and the way forward

On 29 May 2023, President Bola Ahmed Tinubu declared an end to the era of subsidies, stating that there was no longer any provision for fuel subsidies in the country's budget. This message has met with mixed reactions from a cross section of the country. 

In view of the significance of the amount committed to funding the subsidy regime, PwC has put together an article to take a close look at this scheme.

In this paper we have proposed simple and practical approaches to tackle this long standing problem. The objectives of these approaches are to ensure that the most vulnerable members of the population are protected from any negative impact of subsidy removal, and at the same time secure the necessary support required to help make the removal a success.

Please read our article here:

Download Fuel subsidy in Nigeria - issues challenges and the way forward