Navigating the Future: Comprehensive Insights into Estate Planning Methods and Key Considerations

Efficient organization, management, and administration of assets, investments, and wealth are paramount for individuals with substantial resources. Taking deliberate measures and employing unique strategies in this regard ensures the preservation and seamless transfer of accumulated wealth. Estate planning, a deliberate and intentional process, plays a crucial role in managing assets during one’s lifetime and beyond, including posthumously or in the event of incapacitation. Estate planning involves more than just the distribution of assets after death; it encompasses establishing mechanisms for continuous growth and achieving specific goals set by the estate owner. Wikipedia defines estate planning as the process of anticipating and arranging, during a person’s life, for the management and disposal of their estate in the event of incapacitation or death. This includes reducing uncertainties over estate administration, ensuring specific goals are met, such as funding successors’ education, supporting charitable causes, and preserving accumulated wealth. In Nigeria, the concept of estate planning is gaining prominence, with wealthy individuals and families increasingly adopting deliberate strategies for a seamless transition of wealth. This article aims to provide insights into the concept of estate planning, its methods and techniques, and key considerations. Conventional Methods Traditionally, the focus of patriarchs and matriarchs in estate planning in Nigeria has been narrow, often limited to the distribution of wealth after death. This approach may result from a lack of awareness of alternative structures that facilitate continuous wealth growth and ensure the legacy endures. Some conventional methods include: While these conventional methods are widely used, challenges such as disputes and misappropriation underscore the importance of exploring comprehensive and contemporary estate planning strategies. For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Inner Konsult Ltd at at Lagos, Ogun state Nigeria offices, You can also reach us via WhatsApp at +2348038460036.

Fostering Nigeria’s Infrastructure Development: Analyzing the Potential, Confronting Challenges, and Charting the Future with InfraCorp

Over time, Nigeria has grappled with a significant public infrastructure deficit, estimated to require an annual investment of $100 to $150 billion for the next decade to bridge the gap. This deficit encompasses issues like inadequate road and railway networks, insufficient power generation and distribution systems, deteriorating educational and healthcare facilities, and aging airports. The insufficiency of key infrastructure has constrained Nigeria’s growth potential and global competitiveness, impacting economic activities adversely. Recognizing the urgency to address this challenge, the Central Bank of Nigeria (CBN) introduced the Infrastructure Corporation (InfraCorp) in October 2021, with approval from the President in February of the same year. Collaborating with the African Finance Corporation (AFC) and the Nigerian Sovereign Investment Authority (NSIA), the CBN seeded InfraCorp with ₦1 trillion, with plans for it to grow to ₦15 trillion in the coming years. This substantial funding is intended to be directed towards critical infrastructure projects. The Need for InfraCorp in Nigeria’s Infrastructure Development Traditionally, the government tackled infrastructure challenges through budgetary allocations, financed by revenue and supplemented by foreign and domestic debts. However, the reliance on debt has led to concerns about the sustainability of this approach, given the escalating debt profile and the associated servicing costs. In response, the government has explored alternative strategies, such as the Executive Order 007 on Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme, encouraging private sector participation. The National Integrated Infrastructure Master Plan (NIIMP), implemented over 23 years, projects a total investment of $2.3 trillion, with private and public sectors contributing $150 billion annually between 2021 and 2025. Notably, the energy and transportation sectors require over fifty percent of this investment, with the private sector expected to contribute 56%, and the public sector, 44%. InfraCorp’s creation aligns with the NIIMP, aiming to bridge the investment deficit in infrastructure. InfraCorp as a Corporate Entity: Prospects, Challenges, and Future Outlook The concept of a sovereign-backed infrastructure entity is not unique to Nigeria. In the United Kingdom, the Infrastructure and Projects Authority (IPA) operates as a government agency managing the delivery of infrastructure projects, often outsourced to private companies. In contrast, InfraCorp is established as a limited liability company under the Companies and Allied Matters Act, 2020 (CAMA), rather than being an agency with statutory backing. The prospects for InfraCorp are promising, as it addresses the need for alternative funding models and private sector involvement in infrastructure development. Challenges may include ensuring effective collaboration between public and private sectors, managing financial risks, and maintaining transparency in project execution. Looking ahead, the success of InfraCorp hinges on its ability to attract diverse funding sources, navigate regulatory complexities, and efficiently execute projects. Its role in Nigeria’s infrastructure development will be pivotal, potentially serving as a model for similar initiatives in other regions grappling with comparable challenges. For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Inner Konsult Ltd at at Lagos, Ogun state Nigeria offices, You can also reach us via WhatsApp at +2348038460036.

Management Role in Ensuring an Effective Internal Control System

Effective internal control is a critical aspect in modern organizations, gaining increased importance in the early 2000s, particularly in response to prominent accounting scandals in the United States. During this period, various guidelines, laws, and acts were enacted, such as the Sarbanes-Oxley Act of 2002 in the USA and the Security and Exchange Commission (SEC) guidance on Sections 60 – 63 of the Investment and Securities Act of 2007 in Nigeria. These regulations aim to safeguard investors from fraudulent financial reporting and enhance the accuracy of corporate disclosures. These laws have significantly influenced corporate governance codes, emphasizing that business managers are accountable for financial reporting and necessitating a systematic process known as internal control to ensure the attainment of set objectives. Internal control, broadly defined as a process managed by an entity’s board of directors, management, and personnel, offers reasonable assurance regarding operational, reporting, and compliance objectives. The success of an internal control system relies on the active participation of all employees within the organization. It is crucial to distinguish internal control from internal audit. While internal control refers to the organizational system designed to provide assurance on objectives, internal audit is an independent evaluation of internal control, including corporate governance and accounting processes. In establishing an effective internal control system, organizations should adhere to the Institute of Internal Auditors (IIA) Three Lines Model. The first line involves daily operational activities and risk and control procedures, the second line focuses on complementary activities related to risk, and the third line provides assurance to senior management. An effective internal control system within an organization offers several benefits: Section 61 of the Investment and Securities Act of 2007 underscores the importance of internal controls, placing the responsibility on the board of directors to establish and report on the effectiveness of the internal control system. Management plays a crucial role in this process, overseeing controls, reviewing their effectiveness, defining organizational objectives, and communicating these objectives clearly. Management must address key questions such as the organization’s purpose, the implementation of key controls, continuous improvement, task assignments, and reporting structures. This approach ensures a robust internal control system, fostering organizational growth and development. For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Inner Konsult Ltd at at Lagos, Ogun state Nigeria offices, You can also reach us via WhatsApp at +2348038460036.

Navigating the Crossroads: Tradition, Modernity, and Wealth Succession in Nigeria

The Igbinosa family recently found themselves at a crossroads following the passing of their patriarch, Chief Osazuwa Igbinosa, who left behind a substantial fortune. As the family gathered to address the matter of wealth succession, tensions arose, reflecting the delicate balance between tradition and modernity. Chief Osazuwa had not outlined a clear plan for the distribution of his properties, causing uncertainty and discontent among the family members. In this hypothetical scenario, Obasuyi, the second child and first son, stood in anticipation, while Iyobosa, the first child and daughter, challenged the traditional norms, asserting her right to lead and inherit her father’s wealth. The family, torn between adherence to age-old customs and the winds of change, faced a conflict that threatened their unity. This story mirrors the intricate dance between tradition and modernity, a challenge many Nigerian families encounter when navigating the complexities of wealth succession in a changing world. In a country where family ties are deeply rooted, the concept of wealth succession planning holds profound significance. Families are increasingly realizing that without proper planning, accumulated wealth may diminish, leading to financial instability for future generations. Consequently, more Nigerian families are opting for inclusive succession plans that blend traditional values with contemporary needs. This article delves into the role of traditional and cultural beliefs in wealth succession planning, exploring the challenges faced and the opportunities for forward-thinking approaches. Understanding Traditional and Cultural Beliefs Across Ethnicities in Nigeria With over 300 ethnic groups in Nigeria, each region has its own cultural practices regarding wealth succession. Here is an overview of practices in some regions: Northern Region: Influenced by Islamic principles, succession under Islam includes rights for wives and female offspring, challenging the male-centric norms seen in other cultures. South-East Region: Inheritance often goes to the first male offspring, who then distributes the assets among other male siblings. Wives and female offspring typically do not inherit landed property. South-West Region: Distribution methods vary, with estates shared equally among wives or offspring, depending on the chosen model. South-South Region: Primogeniture culture historically favored the first male offspring, leading to discord. The Uhro-System, akin to the South-West’s approach, aims for more equitable distribution. Impact of Traditional Beliefs on Wealth Succession Despite the deep-rooted cultural practices, traditional succession plans alone may not address the complexities of the modern world. Approximately 95% of Nigerian family-owned businesses reportedly struggle to survive beyond the third generation due to the limitations of traditional succession. Primogeniture, prevalent in some cultures, can lead to inequality, family discord, and mismanagement of assets. The emphasis on the eldest male inheriting the majority of assets often neglects individual strengths and may contribute to strained relationships within the family. In summary, while traditional beliefs profoundly influence wealth management, there is a growing recognition that modern challenges require forward-thinking approaches. Balancing tradition with inclusivity and adaptability is crucial for creating sustainable wealth succession plans in Nigeria’s evolving socio-economic landscape. For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Inner Konsult Ltd at at Lagos, Ogun state Nigeria offices, You can also reach us via WhatsApp at +2348038460036.

Tax Appeal Tribunal Rules on VAT Applicability to Rental Income from Real Estate

In a landmark decision on October 19, 2023, the Tax Appeal Tribunal (TAT) in Lagos ruled that rental income derived from real estate properties is not subject to Value Added Tax (VAT). This ruling emerged from a case between NGX Real Estate Limited and the Federal Inland Revenue Service (FIRS), focusing on the applicability of VAT on rental income and the relevant periods defined by amendments to the VAT Act introduced by Finance Acts in 2019 and 2020. Background and Historical Context Before the Finance Act of 2020, there was uncertainty regarding the application of VAT to rent and leases, given the ambiguous language in the VAT Act. The Finance Act of 2019 did not explicitly include or exclude rent or lease, leading to reliance on FIRS Information Circular 9701. This circular suggested that VAT was not applicable to residential property rents but left commercial property rents subject to VAT. Conflicting positions and judgments further complicated the landscape: Appeal by NGX Real Estate Limited NGX, a real estate company, faced a tax assessment of ₦36.2 million from FIRS for unremitted VAT on rental income in the 2020 financial year. Disputing this assessment, NGX filed an appeal with the TAT, asserting that FIRS misinterpreted the VAT Act as amended by Finance Acts in 2019 and 2020. NGX’s argument centered on the definition of “goods” and “services” in the Finance Acts: NGX contended that these amendments indicated a deliberate exclusion of interest in land, supporting their position that rental income, being related to incorporeal property rights, should not be subject to VAT. Implications and Conclusion The TAT’s ruling has significant implications for businesses, particularly those in the real estate sector, clarifying that rental income from real estate properties is not subject to VAT. This decision provides much-needed clarity in an area marked by uncertainty and conflicting interpretations, offering relief to businesses navigating tax obligations related to rental income. For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Inner Konsult Ltd at at Lagos, Ogun state Nigeria offices, You can also reach us via WhatsApp at +2348038460036.

Navigating Capital Needs: Exploring Finance Options for Emerging Corporates

In the aftermath of recent economic challenges, businesses found themselves compelled to increase leverage for survival. This has underscored the longstanding imperative to fortify capital structures and diminish reliance on borrowing, especially for emerging corporates such as Small and Medium Scale Enterprises (SMEs) and early-stage startups. Governmental interventions, though aimed at aiding enterprises by facilitating debt raising, may have inadvertently exacerbated the issue of over-leveraging. Entities undergoing significant transformations, ownership changes, and startups, SMEs, and early-stage companies aiming to optimize their financial structures are confronted with capital gaps. While traditional debt remains a significant funding avenue for entrepreneurs and emerging corporates, particularly through bank financing, it poses challenges, especially for innovative and fast-growing organizations with a heightened risk-return profile. While bank funding will persist as a crucial source, there is growing apprehension that credit limitations might become the new norm, prompting the need to diversify funding options for SMEs and emerging corporates. This diversification is crucial for sustaining their roles in investment, growth, innovation, and job creation. Motivations for Considering Capital Raise Options by Emerging Corporates Emerging corporates often seek external finance for various reasons, notably to generate working capital for growth objectives. Loans provide a means to meet short-term financial demands and fuel expansion, bridging the gap between consumer orders and supplier payments. Increasing the capital base is another key motive for capital raising, especially for companies in sectors subject to regulatory capital requirements. Adapting to macroeconomic conditions and adhering to regulatory standards may necessitate periodic injections of additional capital. Expanding operations is a critical driver for capital raising, particularly for startups eyeing market share growth. The dynamic business environment demands steady resource expansion to navigate challenges, seize opportunities, and ensure sustained growth. Diverse Sources of Finance for Emerging Corporates While bank loans and stock finance are conventional sources, emerging corporates explore alternative avenues such as private equity. Private equity involves direct investments from funds and investors outside public markets. Shareholders anticipate returns on equity investments, and this approach offers benefits like investor selection, flexibility, financial input, and enhanced technical capabilities injected into the business. For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Inner Konsult Ltd at at Lagos, Ogun state Nigeria offices, You can also reach us via WhatsApp at +2348038460036.

Importance of Conducting a Due Diligence in a Transaction

Certainly, due diligence is a critical aspect of various transactions in the business world, playing a pivotal role in ensuring informed decision-making, risk mitigation, and overall transaction success. As the business landscape becomes increasingly complex with factors such as intricate business structures, global expansions, heightened competition, and growing investments, due diligence has gained prominence among investors and corporations. Due diligence involves a meticulous examination of a business, typically conducted by a potential investor in a company. It is carried out from two main perspectives: The timing of due diligence is crucial, and it is typically conducted before any binding contract is entered into between the buyer and the seller. Common scenarios for conducting due diligence include: In essence, due diligence serves as a safeguard against unforeseen risks and uncertainties, allowing parties involved in a transaction to make well-informed decisions that align with their strategic objectives. Whether buying, selling, or investing, due diligence is a valuable tool for navigating the complexities of the modern business environment. For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Inner Konsult Ltd at at Lagos, Ogun state Nigeria offices, You can also reach us via WhatsApp at +2348038460036.

Establishing Effective Enterprise Risk Management: A Holistic Approach to Resilience in Organizations

In any organization, managing risk is crucial due to the inherent uncertainties in the dynamic business environment. To navigate these uncertainties effectively, companies must adopt a comprehensive Enterprise Risk Management (ERM) program that encompasses the identification, control, monitoring, and reporting of risks. This approach is essential for minimizing the impact of risks on the organization and fostering resilience. ERM is an ongoing process, driven by the board of directors, implemented by management, and practiced by employees at all levels. It involves recognizing, understanding, and managing risks across the organization’s operations, creating a holistic image of the business. Given the interconnected and rapidly evolving nature of risks, senior management and boards must dedicate significant time to risk management. As companies aim for organic growth or strategic partnerships, their risk exposure increases. Without a clear understanding of specific risks and vulnerabilities, an ERM program cannot succeed. Identifying and evaluating risks are crucial steps in enabling a company to assess threats and opportunities, supporting the achievement of organizational goals. ERM goes beyond addressing negative risks; it also emphasizes managing positive risks or opportunities that can enhance business value. The goal is not to eliminate all risk but to preserve and add enterprise value by making informed risk decisions and achieving operational efficiency. Building an effective ERM function requires several key components: By integrating these components, organizations can establish a robust ERM framework that enhances their ability to anticipate, assess, and respond to risks, ultimately contributing to the achievement of corporate objectives in a changing business landscape. For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Inner Konsult Ltd at at Lagos, Ogun state Nigeria offices, You can also reach us via WhatsApp at +2348038460036.

Taxation of Digital Assets in Nigeria- Cryptocurrencies and Non-Fungible Tokens (NFTs)

The digital economy, powered by internet, mobile devices, and digital tools, encompasses economic activities supported by digital technologies. With constant advancements, this economy combines human expertise with technological capabilities, offering limitless, data-driven, and mobile-centric experiences. In Nigeria, recent attention to the taxing framework has emerged through Finance Acts, introducing changes to outdated legislative provisions. As technology permeates the economy, even sectors like electoral processes incorporate digital tools. This article examines the taxation of unique digital assets—Cryptocurrencies and Non-Fungible Tokens (NFTs) in Nigeria. It delves into the current and potential implications for holding these assets and anticipates changes in the tax legislation affecting digital asset creators, buyers, and sellers. Digital Assets Defined: Digital assets, following the International Accounting Standards Board (IASB) framework, are digital resources controlled by an entity, providing measurable economic benefits. These encompass various forms like videos, images, data, and more, stored digitally and offering value. Cryptocurrencies and NFTs: Cryptocurrency (Crypto), a digital currency recorded on a blockchain, serves as a digital asset. Bitcoin, a popular Crypto, operates independently of central authorities and can be volatile. Non-Fungible Tokens (NFTs) represent unique digital files tokenized on the blockchain. Each NFT possesses distinct identifiers, history, and value. Factors like rarity and utility influence NFT value, often associated with art, trading cards, or blockchain game items. Taxation of Digital Assets in Nigeria: As of now, Nigeria lacks specific laws for taxing digital assets. The Finance Bill, 2022, awaiting presidential assent, proposes amendments indicating Nigeria’s move towards taxing digital assets. The bill suggests that digital assets, including Cryptocurrencies and NFTs, will be considered chargeable assets under the Capital Gains Tax (CGT) Act. If enacted, every individual or company making gains on digital asset disposal, regardless of residence, will be subject to a flat 10% CGT rate. The bill also places reporting obligations on buyers and sellers of cryptocurrencies, potentially applying retrospectively from January 1, 2022. For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Inner Konsult Ltd at at Lagos, Ogun state Nigeria offices, You can also reach us via WhatsApp at +2348038460036.

Data Privacy, Security and the Boardroom: From Ticking the Compliance Box to Absolute Necessity

The widely accepted notion that personal data is the “new gold” has ushered in a wave of regulatory compliance obligations, both globally and domestically, under data protection laws like the EU General Data Protection Regulation 2016 (GDPR), California Consumer Privacy Act of 2018 (CCPA), and Nigeria Data Protection Regulation 2019 (NDPR). Organizations now face heightened pressure from informed customers, data subjects, and regulatory bodies to prioritize and invest in data privacy compliance. Data privacy has evolved from being the sole responsibility of the Data Protection Officer (DPO) or the Information Security team. It has become a Board and governance issue, with regulatory compliance no longer just a checkbox exercise. This shift is particularly crucial given the increasing frequency of data breaches and their potential impact on an organization’s reputation and bottom line. This article delves into the compelling reasons for Boards of Directors to actively engage in data privacy compliance and outlines practical steps to promote effective board participation in data privacy matters. Moving Beyond Checkbox Compliance – The Board’s Active Role in Data Privacy: For businesses across various sectors, personal data is a valuable asset. Consequently, protecting personal data is integral to a business’s sustained success. The Board of Directors (BoD), as the highest decision-making body, plays a strategic role in shaping the organization’s approach to data privacy. The BoD is tasked with setting the right tone at the top and exercising oversight regarding compliance with applicable data privacy laws and regulations. In jurisdictions like Nigeria, where the maximum fine for a data breach under the NDPR can be as high as 2% of a company’s revenue, the BoD cannot afford to ignore data privacy. The potential consequences, including reputational risks, business disruptions, and loss of revenue, underscore the significance of prioritizing data privacy and protection. Moreover, effective data privacy and security practices can directly influence sales. Building and maintaining trust with customers are critical for all businesses, and concerns about data security can significantly impact customer relationships. Thus, attention to privacy matters can potentially boost sales and, consequently, a company’s bottom line. BoDs should view expenditures on data privacy, information technology, and security as investments in the company’s growth rather than costs to be minimized. In the age of data as the “new gold,” global regulations demand organizations to prioritize data privacy. No longer confined to compliance checkboxes, it’s now a Board and governance imperative. Boards of Directors (BoDs), recognizing personal data’s value, play a strategic role in shaping the organization’s data privacy approach. With hefty fines and reputational risks at stake, the BoD’s active engagement is crucial. Beyond risk mitigation, effective data privacy practices directly impact sales by fostering customer trust. BoDs must view investments in data privacy and security as vital contributions to the company’s growth. For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Inner Konsult Ltd at at Lagos, Ogun state Nigeria offices, You can also reach us via WhatsApp at +2348038460036.