Tax & Business Matters - Nigeria

Nigeria enters tax treaty agreement with ECOWAS member countries

Nigeria has signed a new tax treaty with ECOWAS countries to eliminate double taxation on income, capital, and inheritance. This comes through an Order signed by the Minister of Finance on 1st May 2023 and is in addition to the 16 Double Tax Treaty Agreements that Nigeria has in force.

Effective from January 1, 2024, the treaty applies to various taxes like Personal Income Tax, Companies Income Tax, and Petroleum Profits Tax, Capital Gains Tax, Tertiary Education Tax, and National Information Technology Development Levy.

Key points include:

• Permanent Establishment (PE) rules: The treaty sets a 6-month threshold for creating a Permanent Establishment (PE) in Nigeria for construction and technical services. It also introduces rules for withholding tax on technical service fees at 5% for individuals and 10% for companies.
• Withholding Tax: Technical services will face a withholding tax of up to 5% for individuals and 10% for companies.
• Passive Income: Dividends and royalties paid to beneficial owners in member countries will have a maximum 10% withholding tax.
• Transport Profits: Shipping, airline, and road transport profits will only be taxed in the operator's home country.
• Capital Gains Tax: Tax on share sales will be due only in the shareholder's country unless the company's value is mostly from property.
• Non-Discrimination: Nationals of any member state won’t face more burdensome taxes in another member state than would apply to nationals of that state in the same circumstances.

This treaty promotes regional trade and investment, aligning with the African Continental Free Trade Area (AfCFTA) Agreement. This treaty has been gazetted, although it is uncertain if ratification by Nigeria’s National Assembly has happened. However, it appears unlikely that the tax authorities would dispute the effectiveness of a gazetted instrument. 

Download Tax Alert – Nigeria enters Tax treaty agreement with ECOWAS member countries

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PwC Podcast: Tax Recap Series Episode 5

The April 2024 edition of PwC's Tax recap series is live!

In this episode, Kenneth Erikume, Partner and Lead Tax Reporting and Strategy and Ochuwa Alegeh share insights on 3 recent Executive Orders issued by the Nigerian government. These Executive Orders are:

1. Oil and Gas Companies (Tax Incentives, Exemption, Remission, Etc) Order, 2024
2. Presidential Directive on Local Content Compliance Requirements, 2024
3. Presidential Directive on Reduction of Petroleum Sector Contracting Costs and Timelines, 2024

The release of these Orders follow the circular on Fiscal Incentives for the Presidential Gas Growth Initiative recently issued by the Ministry of Finance. It also addresses some of the concerns of the stakeholders in the Petroleum sector regarding ease of doing business. However, achieving the objectives of the directives will depend on the government’s policy consistency, and collaboration and alignment of the Executive (including the Ministries Departments and Agencies) and the Legislature on the relevant tax and fiscal policy issues. 

WATCH NOW!!!

PwC Podcast: Tax Recap Series Episode 4

PwC's Tax recap series presents yet another exciting pack of insights in this 4th edition!

Esiri Agbeyi, Partner and Africa Family Business Leader, and Chisom Urom, discuss:

• the recent circular on fiscal incentives for the gas sector;
• the Federal High Court ruling that clarifies tax deposits are not mandatory for tax cases to be heard;
• Insights on building sustainable family businesses and recent trends in the private wealth space.

WATCH HERE!!!