Tobi Aminu

The Anambra state Internal Revenue Service (AIRS) says it would on April 1st, 2019, embark on annual audit of companies, businesses and institutions operating in the state in oder to confirm their level of adherence to deduction and remitting of income taxes. The executive chairman of AIRS, Dr. David Nzekwu, who disclosed this in a press conference in Awka on Friday, explained that the exercise was backed by relevant tax laws. Nzekwu said it was expected that every company operating in the state should at the beginning of every year file in their annual returns before 31st January, with details of employees working with them from whom they make Pay As You Earn (PAYE) deductions.  He said: “In addition, the companies are also expected to file in their own returns as a company to the board of internal revenue before 31st March. It is established that any company that fails to file in their tax returns within this period will pay penalty of N500,000. While the penalty for individual is N50,000. It is well spelt out in section 81 and section 41 under the relevant subsections of personal income tax 2011 as amended. He however, commended businesses and companies operating in the state for their compliance to tax payment, adding that it was responsibilities of every citizen and corporate entities to adequately and promptly pay their taxes. On tax evaders, the AiRS chairman, he said the agency would continue to follow due processes, which include obtaining court judgement and executing them accordingly, like it did some months back when it sealed off all branches of United Banks of Africa (UBA) in the state.   Source: Blueprint

The Federal Government of Nigeria (“FGN”), in furtherance of its commitment to infrastructure development being a key growth driver and economic development enabler; issued the Companies Income Tax (Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme) Order, 2019 otherwise referred to as the Presidential Executive Order No. 007 of 2019 (“EO7” or the “Order”). Made pursuant to the executive powers of the Federation, as vested in the President by the Constitution of the Federal Republic of Nigeria, 1999 (as amended) and section 23(2) of the Companies Income Tax Act (“CITA” – Cap C21, Laws of the Federation of Nigeria, 2004), the Order established the Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme (“the Scheme”) as a Public-Private-Partnership (“PPP”) intervention in the delivery of good roads across the length and breadth of the country. Pursuant to the EO7, private companies will be able to finance construction or refurbishment of federal roads designated as “Eligible Roads” under the Scheme and recoup their investments by utilizing the approved total costs expended on the particular Eligible Roads, as a credit against the annual Companies Income Tax payable by such private companies in the corresponding year of assessment. The value of the credit due to a private sector partner, known as the Road Infrastructure Tax Credit (“Tax Credit”), as calculated in accordance with the terms of the Scheme, will be reflected on the Road Infrastructure Tax Credit Certificate (“Tax Credit Certificate”) to be issued by the Federal Inland Revenue Service (“FIRS”), in line with the conditions stipulated in the Order. In specific terms, the Scheme, which has a duration of ten (10) years from the date of commencement of the EO7, is set up to: enable the FGN leverage on private sector funding for the construction or refurbishment of Eligible Road infrastructure projects in Nigeria; focus on the development of Eligible Road infrastructure projects in an efficient and effective manner that creates value for money through private sector discipline; and guarantee Participants in the Scheme timely and full recovery of funds provided for the construction or refurbishment of Eligible Road infrastructure projects in the manner prescribed in the EO7. This article provides a synopsis of the Regulations for the Administration and Operation of the Scheme; Eligible Roads; Participants; and application of the Tax Credit granted under the Scheme. ELIGIBLE ROAD The EO7 defines an Eligible Road as any road approved by the President as eligible for the Scheme on the recommendation of the Minister of Finance and as duly notified to Participants and published pursuant to the Order. Such recommendation, however, is expected to be made from a list of roads presented to the Minister of Finance by the Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme Management Committee (“the Committee”), being the implementing and administrative body to be established pursuant to the EO7. As provided in the EO7, the list of Eligible Roads may be updated from time to time by the President on the advice of the Minister of Finance provided that such updates are published in the Official Gazette of the Federal Republic of Nigeria (“FRN”). ADMINISTRATION AND OPERATION OF THE SCHEME The Scheme is to be implemented and administered by the Committee established by the EO7. As provided in the Order, the Committee is expected to: be chaired by the Honourable Minister in charge of Finance while the Honourable Minister in charge of Works is to be the Deputy Chairman. The Permanent Secretary, Federal Ministry of Finance is to act as the Secretary; draw its members from specified Ministries, Departments and Agencies (“MDAs”) of Government (not below the rank of a Director or its equivalent). The relevant MDAs include the Federal Ministry of Finance; Federal Ministry of Power, Works and Housing; Federal Ministry of Industry, Trade and Investment; Federal Ministry of Justice; Bureau of Public Procurement; FIRS; Nigerian Investment Promotion Commission; Securities and Exchange Commission (“SEC”); Infrastructure Concession Regulatory Commission; Budget Office of the Federation; National Bureau of Statistics; Nigerian Investment Sovereign Authority; and The Presidency; facilitate publication, in the prescribed manner, of the following documents: (i) a list of Eligible Roads as published in the Official Gazette of the FRN; (ii) design and specification of Eligible Roads; (iii) a list of required documentation by an applicant desiring to be registered as a Participant in the Scheme; (iv) Project Cost and Completion Timeline bid; review and evaluate applications submitted by any company, or a pool of companies operating through a Fund Manager; register Participants in the Scheme pursuant to the execution of appropriate Memorandum of Understanding (“MOU”) executed between Participants and the Committee; register and designate as an Infrastructure Fund, any special purpose vehicle (“SPV”) set up by a Fund Manager in accordance with the provisions of the Order, in conjunction with the SEC and in compliance with applicable SEC rules and procedures, as appropriate; ensure that the contracts for road construction and refurbishment included in the Project Cost bid submitted by Participants are obtained through a competitive bidding process, and thereafter facilitate the review, evaluation and approval of the submitted Project Cost and Completion Timeline bid; applying the standard procedures adopted by the Federal Ministry in charge of Works;     facilitate evaluation by the Federal Ministry in charge of Works, the degree of completion of an Eligible Road infrastructure development project and thereupon issue a certificate of work done on an annual basis;     facilitate the issuance, on an annual basis, of a Tax Credit Certificate by the FIRS to a Participant or Beneficiary under the Scheme; within fourteen (14) days of the issuance by the Committee of the certificate of work done;     do other things, specifically provided in the First Schedule to the Order, necessary for the effective administration and operation of the Scheme. PARTICIPANTS Participation in the Scheme is open to the following set of entities:  any company or corporation (other than a corporation sole) established under the Companies and Allied Matters Act or any law in force in Nigeria, and designated as

Lagos State generated N50.4 billion or 60.8 per cent of total N83.2 billion generated from Value-Added tax (VAT) into Federation Account in January 2019. According to documents related to the Federation Account Allocation Committee (FAAC), Federal Capital Territory (FCT) came a distant second with N18.9 billion. Oyo State was third on the list with a VAT collection of N3.0 billion for the month. Rivers and Kano were the only remaining states that crossed the billion naira make with N1.9 billion and N1.2 billion respectively. The document, however, revealed that the Nigeria Customs Service (NCS) also contributed N21.2 billion to the VAT pool during the month under review. Cumulatively, N205.2 billion has been generated into VAT account between January and February this year. This is N52.1 billion short of the projected N257.3 billion for the two month period. Meanwhile, Federal Inland Revenue Service (FIRS) repoted to the FAAC meeting which held on February 27 that it recovered N47.5 billion from waivers on taxes and penalties granted to some companies. A representative of FIRS told the meeting that a balance of N23,703.760,661.00 was still outstanding as at January 23, 2019.   Source: Tribune

As FIRS law demands, all limited liability businesses in Nigeria are to register for company tax TIN (Tax identification number) and VAT (Value Added Tax). To enforce taxation by FIRS, all limited liability businesses bank accounts and money therein, will not be allowed access by their owners after 15th March, 2019 until they register and pay current and arrears of tax based on bank cash transactions over the years, which is huge and devastating for businesses. In view of these, there are three options for businesses that have limited liability bank accounts: ( i) Register with FIRS for company taxes and VAT, and be prepared to pay arrears of tax calculated by FIRS based on your bank cash transactions over the years. ( ii) On or before 15th March, 2019, to withdraw cash, and pay same into either personal account or enterprise account that is not limited liability businesses; and not by transfer since a transfer will still be traced by FIRS via BVN and be taxed. (iii) Or engage a tax consultant for your company to be audited for the number of year it operated , how much tax ought to be paid, the tax due to be paid and tax clearance be collected. Please let our people operating numerous registered limited liability bank accounts be informed to take a step to avoid frustration and embarrassment   Source: Businesstrumpet

As the battle over unpaid $2billion tax arrears between MTN Nigeria and Attorney-General of the Federation (AGF), Abubakar Malami persist, the Chief Executive Officer of MTN Group, Rob Shuter, has said that the nation’s tax authorities have no particular quarrel with the firm various tax assessments. The telecommunication company boss also, said that the AGF is “playing games” over the federal government’s demand of $2 billion tax arrears from the company. Speaking at a conference call where MTN’s 2018 annual results were presented to executives and stakeholders of the company, Shuter said, “Now, of course, what’s odd about the Nigeria-situation is it’s not the Commissioner for Inland Revenue that we have the dispute with. It’s the Attorney General, who is really not mandated to collect the tax. “So the legal process is basically saying you’re playing a game that you’re not meant to be playing. And when we talk to the tax authorities they have no particular quarrel with where we are with our various assessments. “So either we get the thing chucked out early on and the issue is finished, or it is just one of these lingering things that roll around in the system for a while. And personally, I don’t know which way it’s going to play out. “I’m just absolutely adamant that we’re a responsible company, we have paid the taxes we had to pay, and the tax authorities themselves aren’t saying that we owe them anything. So I think we’ve just got to stare this one down.” Although, the hearing of the suit against the AGF first scheduled for November 8, 2018, has been adjourned to March 26. It would be recalled that in September 2018, Malami had written to MTN Nigeria, demanding a payment of $2 billion in tax arrears. He broke the amount down to a 10-year period for import duties, Value Added Tax (VAT) and withholding taxes on foreign imports/payments. MTN Nigeria had denied any wrongdoing, saying it had fully settled all outstanding taxes. The telco also sued the AGF.   Source: Dailytimes

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