September 29, 2023

Introduction: Transfer pricing has become an increasingly important issue in international taxation, including in Nigeria. To address concerns related to base erosion and profit shifting (BEPS), the Nigerian government has taken steps to align its transfer pricing regulations with global standards. The Finance Act 2019 introduced significant changes in this regard, affecting how multinational corporations operating in Nigeria handle transfer pricing compliance and documentation. In this article, we will explore the key provisions of the Finance Act 2019 concerning transfer pricing and the implications for businesses. 1. Definition of Related Persons: The Finance Act 2019 broadened the definition of related persons for transfer pricing purposes. It includes not only affiliates or subsidiaries but also entities in which there is significant influence or control over business decisions. This change aims to prevent profit shifting through non-arm’s length transactions. 2. Documentation Requirements: One of the most significant changes introduced by the Act is the requirement for taxpayers to maintain and submit transfer pricing documentation. Businesses engaged in controlled transactions exceeding ₦300 million in value are now obliged to prepare and maintain detailed transfer pricing documentation. This documentation must be filed with the tax authorities upon request. 3. Penalties for Non-Compliance: The Finance Act 2019 introduced stringent penalties for non-compliance with transfer pricing regulations. Failure to maintain and provide transfer pricing documentation upon request can result in substantial penalties. Businesses should take this requirement seriously to avoid financial consequences and reputational damage. 4. Transfer Pricing Methods: The Act provides guidelines on acceptable transfer pricing methods, including the Comparable Uncontrolled Price (CUP) method, the Resale Price Method (RPM), and the Transactional Net Margin Method (TNMM). Businesses must select the most appropriate method based on the nature of their transactions. 5. Advance Pricing Agreements (APAs): The Finance Act 2019 introduced the concept of Advance Pricing Agreements (APAs) in Nigeria. This allows taxpayers to seek agreement from the tax authorities on the pricing of their controlled transactions in advance. APAs provide certainty and reduce the risk of disputes. 6. Transfer Pricing Audits: The Act empowers the tax authorities to carry out transfer pricing audits. Taxpayers must cooperate fully with these audits, providing access to relevant documentation and information. 7. Mutual Agreement Procedure (MAP): In cases of disputes related to transfer pricing, the Act allows taxpayers to seek resolution through the Mutual Agreement Procedure (MAP) provided under Nigeria’s tax treaties with other countries. This mechanism can help prevent double taxation and mitigate disputes. Conclusion: The Finance Act 2019’s transfer pricing provisions underscore Nigeria’s commitment to international best practices in taxation and the prevention of profit shifting. Multinational corporations operating in Nigeria should be proactive in understanding and complying with these regulations. Compliance with the Finance Act 2019’s transfer pricing requirements is essential not only to avoid penalties but also to foster a transparent and equitable tax environment in Nigeria. By embracing responsible transfer pricing practices, businesses can contribute to a fair and sustainable tax system while safeguarding their interests in the Nigerian market. For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Sunmola David & CO (Chartered Accountants & Tax Practitioners) at Lagos, Ogun state Nigeria offices, www.sunmoladavid.com. You can also reach us via WhatsApp at +2348038460036.

Introduction: Customs duties are a critical component of international trade, affecting both importers and exporters. In Nigeria, the Finance Act 2019 introduced significant changes to the customs duties regime, impacting how goods are imported and exported. These changes aim to streamline processes, enhance revenue collection, and support economic growth. In this article, we will explore the key updates on customs duties brought about by the Finance Act 2019 and their implications for importers and exporters. 1. Reduction in Import Duty on Tractors and Transport Vehicles: One of the notable changes introduced by the Act is a reduction in the import duty on tractors and transport vehicles. This reduction aims to promote agriculture and transportation, aligning with the government’s efforts to diversify the economy. 2. Elimination of Import Duty on Aviation Fuel: The Finance Act 2019 eliminated import duty on aviation fuel, making it more affordable for airlines. This supports the aviation industry’s growth and encourages international trade and tourism. 3. Introduction of Excise Duty on Carbonated Drinks: The Act introduced an excise duty on carbonated drinks. This has implications for both importers of the drinks and local producers. Importers must factor in the excise duty when bringing these products into the country. 4. Excise Duty on Tobacco and Alcoholic Beverages: The Act increased excise duties on tobacco and alcoholic beverages, impacting importers and local manufacturers. This change aims to discourage excessive consumption of these products while increasing government revenue. 5. Zero Import Duty on Commercial Aircraft and Aircraft Spare Parts: To promote the aviation industry, the Finance Act 2019 removed import duty on commercial aircraft and aircraft spare parts. This supports airlines’ operations and reduces the cost of maintaining aircraft. 6. Changes in Export Duties: The Act also made changes to export duties. Exporters should stay informed about these changes to ensure accurate pricing and compliance with export regulations. 7. Compliance and Reporting: Importers and exporters are required to maintain accurate records, calculate duties correctly and fulfill their reporting obligations to customs authorities. Compliance is essential to avoid penalties and ensure smooth trade operations. Conclusion: The Finance Act 2019’s changes to customs duties in Nigeria reflect the government’s commitment to supporting economic growth, international trade and responsible consumption. Importers and exporters should be aware of these changes and their implications for their businesses. Accurate compliance with these regulations is essential for efficient trade operations and responsible tax practices. By understanding and adhering to the new provisions, importers and exporters can contribute to a more transparent and prosperous trade environment in Nigeria. For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Sunmola David & CO (Chartered Accountants & Tax Practitioners) at Lagos, Ogun state Nigeria offices, www.sunmoladavid.com. You can also reach us via WhatsApp at +2348038460036.

Introduction: The Finance Act 2019 represents a significant milestone in Nigeria’s fiscal policy landscape. This Act introduced a range of reforms aimed at modernizing the country’s tax system, promoting economic growth and enhancing revenue collection. To effectively implement the provisions of the Finance Act 2019, the Federal Inland Revenue Service (FIRS) plays a pivotal role. In this article, we will explore the key responsibilities and functions of the FIRS in implementing the Finance Act 2019. 1. Interpretation and Guidance: The FIRS is responsible for interpreting the provisions of the Finance Act 2019 and providing guidance to taxpayers, businesses, and tax professionals. This includes issuing circulars, guidelines and information bulletins to ensure that taxpayers understand their rights, responsibilities, and obligations under the Act. 2. Tax Policy Advisory: The FIRS collaborates with the Ministry of Finance and other relevant government bodies to provide tax policy advice. This involves analyzing the impact of the Finance Act 2019 and proposing recommendations for further reforms to align the tax system with national economic objectives. 3. Legislation Implementation: The FIRS is tasked with implementing the various tax provisions introduced by the Finance Act 2019. This includes changes to tax rates, exemptions, and incentives. The FIRS is responsible for ensuring that these provisions are effectively applied in practice. 4. Taxpayer Education and Awareness: To facilitate compliance with the Act, the FIRS conducts taxpayer education and awareness campaigns. These initiatives aim to inform taxpayers about the changes brought about by the Finance Act 2019, provide guidance on compliance and promote a culture of responsible tax citizenship. 5. Collection and Enforcement: One of the primary functions of the FIRS is the collection of taxes. The Finance Act 2019 introduced new tax obligations, including Value Added Tax (VAT) on digital services and withholding tax on certain transactions. The FIRS is responsible for collecting these taxes and enforcing compliance through audits, investigations, and penalties for non-compliance. 6. Monitoring and Reporting: The FIRS continuously monitors tax collections and compliance levels to assess the effectiveness of the Finance Act 2019. This includes conducting audits, data analysis, and risk assessment to identify areas of improvement and potential tax evasion. 7. Stakeholder Engagement: The FIRS engages with various stakeholders, including business associations, tax professionals, and government agencies, to foster collaboration and share information on the implementation of the Finance Act 2019. These partnerships help address challenges and ensure a smooth transition to the new tax regime. Conclusion: The Federal Inland Revenue Service (FIRS) plays a critical role in the successful implementation of the Finance Act 2019 in Nigeria. As the agency responsible for tax administration and revenue collection, the FIRS is at the forefront of interpreting, enforcing and educating taxpayers about the Act’s provisions. Its efforts are essential for achieving the Act’s objectives of modernizing the tax system, promoting economic growth and enhancing revenue collection. For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Sunmola David & CO (Chartered Accountants & Tax Practitioners) at Lagos, Ogun state Nigeria offices, www.sunmoladavid.com. You can also reach us via WhatsApp at +2348038460036.

Introduction: The digital economy has experienced exponential growth worldwide, transforming how goods and services are produced, delivered, and consumed. In Nigeria, as in many other countries, the Finance Act 2019 addressed the challenges and opportunities presented by the digital economy by introducing reforms to the taxation of digital services. This article explores key insights from the Finance Act 2019 regarding the taxation of digital services in Nigeria. 1. Definition of Digital Services: The Finance Act 2019 provides a clear definition of digital services, encompassing a wide range of online activities. These services include the provision of digital content, such as e-books and streaming services, the sale of software and applications, online advertising and the facilitation of e-commerce transactions. 2. Value Added Tax (VAT) on Digital Services: One of the significant changes introduced by the Act is the imposition of Value Added Tax (VAT) on digital services provided by foreign companies to Nigerian consumers. This means that foreign digital service providers are now required to register for VAT in Nigeria, charge VAT on their services, and remit the collected VAT to the Nigerian tax authorities. 3. VAT Reverse Charge Mechanism: To ensure compliance with VAT obligations, the Finance Act 2019 introduced the VAT Reverse Charge mechanism. Under this mechanism, Nigerian businesses that purchase digital services from foreign companies are responsible for self-assessing and remitting the VAT to the tax authorities. This shift in responsibility helps ensure that VAT is collected and remitted effectively, even when foreign providers may not have a physical presence in Nigeria. 4. Digital Advertising Services: The Act explicitly includes digital advertising services as subject to VAT. This has implications for businesses that advertise their products or services on online platforms, as they are now required to consider the VAT implications of their advertising expenses. 5. Withholding Tax on Digital Transactions: The Finance Act 2019 also introduced withholding tax obligations for transactions involving non-resident companies that provide digital services in Nigeria. Nigerian businesses are required to withhold tax on payments made to foreign digital service providers and remit the withheld tax to the tax authorities. 6. Transfer Pricing Rules: The Act strengthened transfer pricing regulations to prevent profit shifting and base erosion in the digital economy. Companies engaging in related-party transactions, including digital services, must ensure compliance with the arm’s length principle and accurate documentation. 7. Compliance and Reporting: Compliance with the new digital service taxation rules is crucial. Businesses are required to maintain accurate records, calculate and remit VAT and withholding tax as appropriate and fulfill their reporting obligations to the tax authorities. Conclusion: The Finance Act 2019’s reforms regarding the taxation of digital services reflect the Nigerian government’s commitment to creating a fair and equitable tax system in the digital age. These changes are designed to ensure that foreign and domestic digital service providers contribute their fair share of taxes while promoting transparency and compliance. Understanding these provisions, calculating taxes accurately and complying with reporting requirements are essential for businesses operating in the digital economy. By embracing these changes, businesses can contribute to a transparent tax system that supports Nigeria’s economic growth and development in the digital age. For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Sunmola David & CO (Chartered Accountants & Tax Practitioners) at Lagos, Ogun state Nigeria offices, www.sunmoladavid.com. You can also reach us via WhatsApp at +2348038460036.

Introduction: The Sustainable Development Goals (SDGs) are a global agenda aimed at addressing some of the world’s most pressing challenges, including poverty, inequality, climate change, environmental degradation, peace and justice. To achieve these ambitious goals, countries must align their policies and practices with the SDGs. In Nigeria, the Finance Act 2019 represents a significant step towards advancing the SDGs by introducing reforms that support sustainable development. In this article, we will explore how the Nigeria Finance Act 2019 promotes the attainment of the SDGs. 1. Reducing Inequality (SDG 10): One of the Finance Act 2019’s key provisions is the increase in the Value Added Tax (VAT) threshold, which exempts small businesses with an annual turnover of less than N25 million from paying VAT. This move reduces the tax burden on small businesses, supports entrepreneurship, and contributes to reducing economic inequality—a crucial aspect of SDG 10. 2. Promoting Economic Growth (SDG 8): The Act also provides incentives for Micro, Small, and Medium Enterprises (MSMEs) through reduced income tax rates and exemptions for businesses with an annual turnover below a specified threshold. By fostering the growth of MSMEs, the Finance Act 2019 contributes to SDG 8, which seeks to promote sustained, inclusive and sustainable economic growth. 3. Access to Quality Education (SDG 4): The Finance Act 2019 exempts educational materials like textbooks and educational services from VAT. This makes education more affordable and accessible, aligning with SDG 4’s goal of ensuring inclusive and equitable quality education for all. 4. Ensuring Clean Energy (SDG 7): The Act also provides incentives for renewable energy projects, including a lower income tax rate for companies engaged in renewable energy activities. This promotes the use of clean energy sources, contributing to SDG 7, which focuses on affordable and clean energy. 5. Supporting Healthcare (SDG 3): The Act exempts basic healthcare services from VAT, making healthcare more affordable for Nigerians. This supports SDG 3, which aims to ensure health and well-being for all at all ages. 6. Encouraging Sustainable Consumption and Production (SDG 12): By introducing electronic tax transactions and digital stamp duties, the Finance Act 2019 encourages paperless and efficient financial transactions, contributing to SDG 12’s goal of promoting sustainable consumption and production patterns. 7. Strengthening Tax Revenue (SDG 17): Ultimately, the Finance Act 2019’s provisions are designed to strengthen tax revenue collection in Nigeria. Increased revenue enables the government to invest in infrastructure, social services, and other initiatives that support the SDGs. SDG 17 highlights the importance of partnerships for the goals, including partnerships between governments and businesses to mobilize resources for sustainable development. Conclusion: The Nigeria Finance Act 2019 represents a significant step towards promoting the Sustainable Development Goals (SDGs) by aligning fiscal policies and practices with the global agenda for sustainable development. The Act’s provisions support economic growth, reduce inequality, enhance access to education and healthcare, and encourage sustainable practices. For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Sunmola David & CO (Chartered Accountants & Tax Practitioners) at Lagos, Ogun state Nigeria offices, www.sunmoladavid.com. You can also reach us via WhatsApp at +2348038460036.