March 13, 2019

Nigeria: FIRS Issues Guidelines On Mutual Agreement Procedure

Introduction  The Federal Inland Revenue Service (FIRS) has issued Guidelines on Mutual Agreement Procedure (MAP) in Nigeria and Certificate of Residency Forms for taxpayers seeking to take advantage of the MAP. Mutual Agreement Procedure: MAP is a dispute resolution mechanism designed to resolve international tax disputes arising from inconsistent interpretations of double tax agreement (DTA) provisions, which may result in double taxation for taxpayers.  Nigeria’s DTAs contain MAP provisions that enable taxpayers approach Competent Authorities (CAs) in Nigeria or those in jurisdictions of Nigeria’s treaty partners to seek redress where they believe they are not being taxed in accordance with the provisions of the relevant DTA.  The MAP Guidelines: The Guidelines provide guidance to taxpayers on how to obtain assistance from the Nigerian CA; and how corresponding adjustments would be applied in the event of transfer pricing (TP) adjustments.  Scenarios requiring: MAP Taxpayers may require assistance from the CA where there are disputes relating to:  a)transfer pricing adjustments; b)dual residence status; c)attribution of profits of a permanent establishment; d)levy of withholding taxes beyond what is permitted by the applicable DTA; and e)uncertainties relating to the characterisation or classification of an item of income arising from the other jurisdiction. Request for assistance: Before submitting a MAP request, a taxpayer is required to carry out pre-filing consultations (a meeting or written correspondence) with the FIRS. This should contain a summary of the facts of the case and reasons for the MAP request. State Boards of Internal Revenue (SBIR) may also participate. Where the outcome of the pre-filing consultation is positive, taxpayers would be expected to submit a detailed written request for consideration. A request for MAP would not affect the requirement regarding any disputed tax liability. Timing of MAP:  requests Although the timeframe for presenting a case for the CA’s assistance depends on the specific terms of the DTA invoked, taxpayers are expected to present their case within 3 years of receipt of the notice of assessment.   Conditions for acceptance: The Nigerian CA will accept a MAP request where: the issue relates to a foreign country with which Nigeria has an in-force DTA; there is evidence that the actions of one or both countries will result in taxation that is not in accordance with the DTA; the taxpayer notifies the Nigerian CA within the acceptable timeframe;  the issue is not one that either CA has decided not to consider as a matter of policy.  Once a request has been accepted, the Nigerian CA would try to resolve the issue on its own. Where this is not possible, the Nigerian CA will notify the CA in the other country of its intention to commence the MAP. The taxpayer may withdraw the request for MAP at any time before an agreement has been reached between the CAs. Likewise, the Nigerian CA may terminate the MAP in certain circumstances.  Role of the taxpayer: MAP negotiations are between the CAs, as such the taxpayer’s role is limited to presenting its views and facts. This may involve making presentations to the CAs, where necessary.  Notification of agreement; The Nigerian CA will notify the taxpayer in writing of any agreement that has been reached during the MAP. Where the taxpayer is not satisfied with the outcome of the MAP, the taxpayer may seek legal remedy.    If the taxpayer accepts the decision of the MAP, a request for refund of taxes or reassessment of tax to reflect the decision of the MAP must be filed by the taxpayer within 3 months of the decision, but not later than 6 years after the MAP decision. Takeaway: The Guidelines bring Nigeria closer to international standards as it affords taxpayers an additional avenue for resolving jurisdictional double taxation tax dispute. However, considering Nigeria’s limited treaty network, it remains to be seen how far reaching the impact of the MAP would be on Nigerian taxpayers   Source: Mondaq

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Nigeria’s corporate affairs commission reduces cost business registration.

The cost for the registration of business names in Nigeria has been reduced from N10,000 to N5,000. This was announced by the Corporate Affairs Commission on Wednesday, March 6 – According to CAC, the reduced cost of business name registration will end on Sunday, March 31. The Corporate Affairs Commission (CAC) has announced a reduction in the cost of business names’ registration. The commission on Wednesday, March 6, said the registration fee for business names in Nigeria has been reduced from N10,000 to N5,000. However, the CAC said the reduction in cost for business name registration will end on Sunday, March 31. The commission also advised the general public to take advantage of the Business Incentive Strategy (BIS) window to formalize their businesses before the deadline. Meanwhile, Legit.ng previously reported that the CAC had earlier promised to register business names within six hours of successful application. The commission said it will ensure an effective deployment of information technology for registration of business names. During the annual conference of the Nigerian Bar Association, the acting registrar of the commission, Azuka Azinge, said the move is part of efforts aimed at addressing some of the bottlenecks usually encountered during the registration of business names.   Source: Legit

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Seplat Petroleum‘s Profit After Tax Falls to N45 Billion

The shares of Seplat Petroleum Development Company Plc fell 3.5 per cent yesterday as investors reacted negatively to the audited results of the company for the year ended December 31, 2018. The shares fell from N619.00 to N596.90 per share. The firm, which is listed on the Nigerian Stock Exchange (NSE) and London Stock Exchange (LSE) yesterday released its audited results. Although the company recorded higher revenue, profit after tax (PAT) fell by 44.6 per cent. Specifically, Seplat posted revenue of N228.4 billion in 2018, up by 65.2 per cent from N138.3 billion recorded in 2017. Cost of sales rose 48 per cent from N73.4 billion to N108.6 billion, while gross profit jumped by 84.6 per cent to N119.8 billion from N64.9 billion in 2017. Net finance cost fell by 31.8 per cent to N14.3 billion, from N20.9 billion in 2017. Profit before tax (PBT) increased by 499 per cent from N13.5 billion to N80.6 billion. However, PAT fell from N81.1 billion to N44.9 billion due to debt of N35.7 billion in 2018, compared with a tax credit of N67.7 billion in 2017. The board of directors has recommended a dividend of N18 per share. The Chairman of Seplat, ABC Orjiako had disclosed plan of the company to invest more in its gas business in last year so as to boost revenue and deliver more returns to investors. “Our strategy to diversify and grow our sources of income through the expansion of our gas business continues to gain momentum. Since the government launched various initiatives to stimulate investment in the gas sector, including opening the Domestic Supply Obligation (‘DSO’) price to commercial market forces, Seplat has been at the forefront of gas commercialisation and made substantial investments in support of the government’s energy agenda,” he said. The Chief Executive Officer of Seplat, Austin Avuru had said the company registered strong cash flow performance and significantly strengthened the balance sheet the previous year. “Our proactive and decisive management coupled with the strong underlying fundamentals of the business have seen us emerge from an exceptionally challenging period a much fitter and stronger business that is well equipped to deliver long-term value for our shareholders,” he said. Meanwhile, the the three-day bullish run in the domestic equities market was halted yesterday as the NSE All-Share Index declined 0.16 per cent to close at 32,121.74.   Source: Thisday

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GTBank Posts N434bn Earnings, Profit after Tax of N185bn

Guaranty Trust Bank (GTBank) Plc has announced improved performance for the year ended December 31, 2018 and recommended a final dividend payment of 245 kobo per share. The bank recorded gross earnings for the year grew by 3.7 per cent to N434.7billion, from N419.2billion reported in 2017. Its net interest income fell from N246.663 billion to N222.433 billion, while net fee and commission income improved from N40.732 billion to N50.470 billion in 2018. Impairment charges reduced significantly from N12.169 billion to N4.906 billion,. GTBank ended the year with profit before tax of N215.6 billion, representing a growth of 9.1 per cent over N197.7billion recorded the previous year, while profit after tax (PAT) stood at N184.639 billion compared with N167.913 billion posted in 2017. The bank’s customer deposits increased by 10.3 per cent to N2.274trillion from N2.062trillion in December 2017, while loan book dipped by 12.9 per cent from N1.449 trillion in 2017 to N1.262trillion in 2018. The bank is proposing final dividend of N2.45 per share in addition to interim dividend of 30 kobo bringing total dividend for 2018 financial year to N2.75. Commenting on the results, the Managing Director/CEO of GTBank Plc, Mr. Segun Agbaje, said: “In 2018, our focus on staying nimble, strengthening customer relationships and driving our digital-first strategy paid off. We successfully navigated the pressures of our challenging and radically changing business environment, recorded growth across key financial indices and reaffirmed our position as one of the best performing and well managed financial institutions in Africa.” According to him, the performance reflects, not just the fundamental strength of the brand, but also its commitment to its values of excellence, creating value for all stakeholders and putting its customers first in everything that it does. “Driven by these values, we are building the bank of the future by pairing the best of our business with the massive potential of digital technologies to create Africa’s first integrated and trusted platform; Habari,” Agbaje said. In recognition of the bank’s bias for world class corporate governance standards, excellent service delivery and innovation, GTBank has been a recipient of numerous awards over the years. Some of the bank’s awards in 2018 included: Bank of the Year – Nigeria from the Banker Magazine, Best Banking Group and Best Retail Bank Nigeria from World Finance Magazine, Most Innovative Bank from the African Investor, and Best Digital Banking Brand in Nigeria from the Global Brands Magazine.   Source: Thisday

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Telcos Cry Out over Multiple Taxes, Seek Tariff Review

Telecommunication companies (Telcos) have expressed concerns over recent move by various states ministry of environment to impose environmental impact assessment (EIA) levy on their operations across the country. They described the development as another form of multiple taxation that would impede the growth of the sector. To this end, the operators under the aegis of the Association of Licensed Telecoms Operators of Nigeria (ALTON), have written to the Federal Ministry of Environment, explaining the economic implication of allowing States’ Ministry of Environment to collect environmental impact assessment levy directly from the operators across the country, after they have paid same levy to the federal government through the Federal Ministry of Environment and the National Environmental Standards and Regulations Enforcement Agency (NESREA). The operators want the Federal Ministry of Environment to review the existing telecoms tariff in order to address every anomaly with telecoms tariff and taxes. According to the operators, they obtained EIA from the Federal Ministry of Environment through NESREA in collaboration with each state ministry of environment, but wondered why the states are now coming up with fresh demands for EIA levy, which they said, amounted to multiple taxation and charges. “We have received complaints from our members that they have been receiving demand notices for environmental impact assessment payment from some states government ministries of environment, which we considered as an aberration of the existing law,” ALTON said in the letter, which was signed by its Chairman, Gbenga Adebayo. The letter dated February 21, 2019, sought clarification on issues such as: “That the Federal Ministry of Environment has ceded the EIA oversight functions to some states ministry of environment to issue EIA certification to its members and that some states ministry of environment as the case may be can conduct EIA process in its members without recourse to the Federal Ministry of Environment and National Environmental Standards and Regulations Enforcement Agency (NESREA).” Others include: “That the statutory responsibility on environmental issues of the Federal Ministry of Environment has been transferred to the states government; That the states now have power to collect ecological fund from private sector after payment has been made to them by the federal government.” In the letter, Adebayo requested from the Federal Ministry of Environment to clarify these positions, so as to guide ALTON in its dealing with the situation and to advise its members accordingly. Adebayo also called on the federal government to look into the issue of Tax and Levy Amended Order 2015, which he said, was hurriedly signed by the former Minister of Finance in the last administration, Mrs. Ngozi Okonjo-Iweala. The signed order according to him, had created confusion in the taxes and levies regime and making the telecoms environment hash for business, not minding the federal government policy on ‘Ease of Doing Business’ in Nigeria. Adebayo, had said since the order was signed in 2015, it has created a lot of confusion in the taxes and levies regime and made the telecoms environment hash for business, not minding the federal government executive order on ‘Ease of Doing Business in Nigeria.’ According to him, “The telecommunications industry has been the best customer centric sector, where issue pertaining to subscribers are taken very seriously by both the operators and the regulator, and despite all challenges there has not for once been an outage compare to other sectors, where you are put on estimated bills and inconsistence in flight schedules that have made several people missed appointments and valued meetings just to mention few. “There was no face-off between NCAA and ALTON and its members. Although we need clarification on the charges, this led to the agreement at the meeting to form an advisory committee which comprises NCAA and ALTON representatives. Our members are responsible corporate citizens of the country and natural partners in progress that follow due processes.”   Source: Thisday

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