On July 1, 2019, Nigeria’s Federal Inland Revenue Service (FIRS) made the Income Tax (Common Reporting Standard) Regulations 2019 (the Regulations) to regulate how financial institutions are to report on the accounts maintained by persons that are not tax-resident in Nigeria or the United States of America. In this brief, we itemize 12 things your financial institution should know and do under the Regulations
- Your financial institution has an obligation to know the tax residence of all persons who maintain an account with it. Accordingly, put in place a due diligence framework that elicits this information from all your customers.
- Maintain a register, schedule or enterprise resource planning tool (ERP) that identifies all the accounts (Reportable Accounts) maintained by your customers or persons that are not tax-resident in Nigeria or the United States of America (Reportable Persons)
- Persons who have dual tax residency, for example, being tax resident in both Nigeria and Canada, are Reportable Persons.
- Your register, schedule or ERP must contain information such as the following on the Reportable Person: The name, address, Jurisdiction of residence, date and place of birth, account number; tax identification number; income (including interest, dividends and other income) earned; and account balance as at the period.
- Prepare and submit an annual Reportable Accounts information (Information Returns) not later than May 31 of every year to FIRS.
- Information Returns on all Reportable Accounts maintained in your Financial Institution in 2019 is due to be submitted to FIRS on May 31, 2020.
- You are still required to submit Information Returns even though you have no Reportable Accounts.
- FIRS shall share your Information Returns with its counterparties further to Nigeria’s obligation under the multilateral agreement on the automatic exchange of financial account information
- Similar to your accounting records, your Information Returns are required to be kept for minimum of 6 years thereafter.
- FIRS may, by a notice in writing, require your financial institution to furnish it, within a minimum of 14days, with any document or information on compliance with the Regulations
- Failure to comply with any of these obligations will expose your financial institution to a maximum flat fine of ₦10million plus ₦1million for every month of breach. For emphasis, your obligations include: keeping record of Reportable Persons and Reportable Accounts; filing your Information Returns correctly and accurately; and being ready at any time to supply FIRS with any lawful document or information required.
- You can employ the services of a service provider like Taxaide to assist with your due diligence and reporting obligation under the Regulations. Taxaide can also assist with the automation of your CRS compliance process including deploying a CRS-focused ERP.
For further enquiries on the subject, please contact any of: Emenike Ugwuanyi (e.ugwuanyi@localhost; +234 806 536 7616) or Bidemi Olumide (b.olumide@localhost; +234 708 194 8467).