Procedures for FIRS Consent and Tax Considerations in Mergers.

Introduction: In accordance with the Federal Competition and Consumer Protection Act of 2018, mergers in Nigeria involve one or more undertakings gaining control over the business of another. This can be achieved through share purchase, amalgamation, or joint ventures. The Federal Inland Revenue Service (FIRS) plays a crucial role in the merger process, requiring its consent for tax-related considerations. Approval of the Federal Inland Revenue Service (FIRS): Section 29(12) of the Companies Income Tax Act (CITA) makes it mandatory to obtain the FIRS’s direction and clearance concerning taxes payable under the CITA or Capital Gains Tax Act before executing any merger, take-over, transfer, or business restructuring. The FIRS approval is a prerequisite for the successful completion of a merger transaction. Merging entities must submit the scheme of merger, scheme of arrangement, and a due diligence report covering tax aspects to the FIRS Board for review. In certain cases, additional guarantees or security may be requested to ensure the payment of all taxes owed by the transferring entity. Tax Implications of Mergers: Upon securing approvals and concluding the merger process, various tax implications arise, depending on the outcome of the merger. Key considerations include: Conclusion: Before engaging in a merger, understanding the required steps and documentation for FIRS consent is crucial, as failure to comply can jeopardize the merger’s completion. Additionally, being aware of the tax implications associated with various merger options helps make informed decisions about the most suitable approach. 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, You can also reach us via WhatsApp at +2348038460036.