April 2022 - Taxaide

THE TAXAIDER NEWSLETTER VOL 4, ISSUE 2 (FEBRUARY 2022)

First Thoughts: The World Is In Flames, And It’s Tempting To Scream!

Week after week, we’re presented with the evidence of a fast-sinking world: the climate-change crisis, our fragile economies, a pandemic that has killed and infected a lot of people, and now Russia is invading Ukraine! So yes, I understand why you’d want to scream. But here’s the thing: Screaming isn’t working. We have been screaming for decades about all these kinds of stuff, but the world is still falling apart.

COMPANY INCOME TAX (CIT) IN NIGERIA: THINGS YOU NEED TO KNOW

A registered business in Nigeria that earns a legitimate income is captured under the Company Income Tax Act (CITA), Cap C21, LFN 2004 (as amended) to pay the tax due from all its revenue sources.

However, the provision of the Company Income Tax Act (CITA), Cap C21, LFN 2004 (as amended) exempts income or profits earned from some particular sources from CIT.

BAD DEBTS AND ITS PROVISIONS IN LINE WITH FIRS PRACTICES

As an organization, it is almost a norm to incur bad debts in the process of running a business. Bad debt can be defined as an expense arising from the company’s account receivables becoming unretrievable/ uncollectible. This is an operational and financial risk associated with the daily running of a business and the account receivables should be assessed for impairment on a forward-looking basis and reported in the financial statements for each year at the financial year-end in line with International Reporting Standards (IFRS) 9 which is on “Financial Instruments”. A lot of reasons can be factored into account receivables becoming uncollectible thus becoming bad such as:

WHY YOU SHOULD TAKE TAX PLANNING SERIOUSLY

Treating taxes as an afterthought can lead to some expensive mistakes. People who fail to plan and end up paying more than they should on their taxes feel frustrated when that happens. There are a lot of ways to avoid these issues from arising, and tax planning is one of them.

Tax planning entails a financial strategy designed for tax efficiency. The goal is to reduce one’s tax liabilities and maximize the use of tax exemptions, tax rebates, and benefits. In addition, tax planning involves making financial and business decisions that reduce the tax burden. By taking advantage of all beneficial provisions under tax laws, you can legitimately reap the maximum benefits.

THE TAXAIDER NEWSLETTER VOL 4, ISSUE 1 (JANUARY 2022)

First Thoughts: Trusting Your Gut

I’ve been there, and I’m sure you have too. You knew something was up, but you didn’t listen to your gut and now you’re regretting it.

Telling yourself that you are “just being paranoid” or “paranoid for no reason” doesn’t help, it only makes you feel worse.

The reality is that your gut is never wrong. Your gut is a completely dependable source of information about what is going on around you. It may not be consciously accessible, but it is always there, assessing what is going on around you. And it knows before your conscious mind does, whether something feels right or not.

TAXATION OF INSURANCE BUSINESS: WHAT YOU NEED TO KNOW

Companies Income Tax Act, Cap C2, LFN 2004 (“CITA”) is the general income-tax administrative framework for companies in Nigeria.

However, due to the peculiarity of the insurance business, Section 16 of CITA is particularly dedicated to companies operating in the insurance sector. Section 16 of CITA explicitly addresses the specific income-tax administrative needs of the insurance companies.

KEY HIGHLIGHTS OF NIGERIA’S FINANCE ACT 2021

Hello there

Welcome to another Tax Thursday.

You would agree with us that 2021 was an interesting year, and indeed a busy one. Just as the country was tackling its battles, the FIRS was also swamped with a few legal battles. Worthy of mention was the bid of some states majorly championed by Rivers State and Lagos State to get control over the collection and appropriation of VAT within their jurisdiction, and we all witnessed how this turned out. Additionally, just before the end of 2021, the FG released the Nigeria Finance Act of 2021, which introduced new taxes, levies, and tariffs.

CONSTITUENT ENTITIES RESUME CBC REPORTS FILING IN NIGERIA

Nigeria’s Federal Inland Revenue Service (FIRS) has issued a Public Notice [BO1] to lift its May 2021 suspension of Local Filing of Country-by-Country (CbC) Reports by Constituent Entities in Nigeria. Constituent Entities are the Nigeria-based subsidiaries and branches of Multinational Enterprises. Relevant Constituent Entities are now to, with effect from January 1, 2022, duly make their CbC Reports Local Filing with FIRS in compliance with Regulation 4 of the CbC Regulations 2018 (CbC Regulations).[BO2] You may recall that the obligation placed on relevant Ultimate Parent Entities (UPEs) under Regulation 3 of the CbC Regulations was never suspended.

STAMP DUTY ADMINISTRATION FOR FINANCIAL INSTITUTIONS IN NIGERIA: WHAT YOU NEED TO KNOW

Stamp duty is a levy on written and electronic documents or instruments. Stamp duties are levied on instruments on either Ad-valorem or flat rate basis and the body in charge of the administration of stamp duties is either the federal Inland Revenue Service (FIRS) (duties on instruments for transactions between corporate bodies and individuals, group, or body of individuals) or the State Internal Revenue Service (duties on instruments for transactions between individuals).

TAX DEDUCTIBILITY OF BAD AND DOUBTFUL DEBT: WHAT YOU NEED TO KNOW

An organization in the business of making profit and trade continuity will issue invoices, render a service, and carry out a particular function which is expected to have a direct impact on the inflow of the business. While carrying out the day-to-day operation of the business and in some unexpected situations, the proceeds from the services rendered or goods sold are either never paid or remain unpaid over a long period.