Mandatory Retirement Savings Account (RSA) Now Accessible before Retirement

Introduction:

The National Pension Commission (PenCom) recently issued and approved the immediate implementation of the Guidelines on Accessing RSA Balance For Payment of Equity Contribution of Residential Mortgage by RSA Holders (Guidelines). The Guidelines were issued pursuant to Section 89(2) of the Pension Reform Act 2014 (PRA), which provides that “a Pension Fund Administrator may, subject to guidelines issued by the Commission, apply a percentage of the pension assets in the retirement savings account towards payment of equity contribution for payment of residential mortgage by a holder of Retirement Savings Account”.

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Tax reliefs Available Under the Personal Income Tax Act

In Nigeria, the Personal Income Tax Act (PITA) is the principal legislation that governs the taxation of individuals, communities, families, trustees, and estates. The PITA imposes a tax on the total income of taxable persons subject to a few exemptions which may be found under the Third Schedule to the PITA (Third Schedule), Items One and Two of the Sixth Schedule to the PITA, or under any other relevant provision of the PITA such as Sections 19 & 20.

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Filing Season: Corporate Taxes Database

Introduction:

The Companies Income Tax Act (CITA) requires companies to file their income tax returns and pay their income taxes within six months after their accounting year-end. Most companies have their accounting period spanning from 1 January to 31 December and as such are required to file their income tax returns and pay their income taxes on or before 30 June of the following year. It is common practice for companies to file along with their income tax other corporate taxes such as National Information Technology Development Agency Levy (NITDA Levy), National Agency for Science and Engineering Infrastructure Levy (NASENI Levy), Police Trust Fund Levy (PTF Levy), and Tertiary Education Tax (TET).

In this TaxThursday Publication, we succinctly present salient factors to consider when filing corporate taxes in Nigeria.

Corporate taxes payable in Nigeria:

Companies Income Tax (CIT)

  Principal Legislation  CITA
  Tax Rate Section 9(1) CITA Section 40(1) CITA Section 105 CITA    Tax is chargeable on the profits of a company derived in, brought into, or received in Nigeria (provided such profits are not subject to tax under the Capital Gains Tax Act, Petroleum Profits Act, or Personal Income Tax Act).   The applicable tax rates are indicated below.   20% of total profits of companies that earn gross turnover greater than N25,000,000 but less than N100,000,000.   30% of total profits of companies that earn a gross turnover of N100,000,000 or above.   Companies that earn a gross turnover of N25,000,000 or less are exempt from CIT.
  Tax relief on Interest on foreign loans Section 11(1) CITA      Interests payable on foreign loans are partially exempt from tax as shown in the table below.   Repayment Period   Grace Period Including Moratorium Tax Exemption Above 7 years   Not less than 2 years 70% 5-7 years   Not less than 18 months 40% 2-4 years   Not less than 12 months 10% Below 2 years   Nil Nil           Repayment period means the agreed tenor of the loan facility provided that where the loan is paid before expiration of the agreed time, the tax exemptions provided under the CITA would be adjusted accordingly.   Moratorium refers to the period at the beginning of the loan term during which the borrower is not expected to make any repayment of principal or interest.  

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.

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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:

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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.

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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.

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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.

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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.

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