Constant increase in the inflation rate – Nigeria’s CPI August 2020 Report

The latest CPI and Inflation Report released by the National Bureau of Statistics has revealed that inflation increased by 13.22% (Year-on-Year) in August 2020. This is 0.40% points higher than the rate recorded in July 2020 (12.82%).

It’s is not so surprising that the consumer price index (CPI) in Nigeria rose to its highest in over 3 years in the previous month (August 2020). The increase in the price of food is said to be the major reason in this hike.

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TAT’s Decisions on VAT on Real Property Leases – Some Clarifications

As you are aware, on Tuesday, 10th September 2020, the Tax Appeal Tribunal sitting in Lagos State, Nigeria (TAT) delivered Judgement in  Appeal No. TAT/LZ/VAT/029/2019: Ess-Ay Holdings Limited v. Federal Inland Revenue Service (FIRS) (available at: https://taxaide.com.ng/wp-content/uploads/2020/09/Judgement-Ess-ay-Holdings-Ltd-v.-FIRS.pdf)

Issues to be determined:

  1. Whether rental income from real property is subject to Value Added Tax (VAT) under Nigeria’s VAT Act, 1993 (as last amended in 2007)?;
  2. Whether the provisions of the FIRS Information Circular No. 9701 dated 1st January 1997 which exempted only rents from residential properties (and not commercial properties) is valid?
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THE TAXAIDER NEWSLETTER VOL 2, ISSUE 8 (AUGUST 2020)

First Thoughts: Post-Lockdown Musings

I have often heard some people say they usually get their inspiration to write from rather uncomfortable situations and experiences. I say, ‘well done to them’. I guess I need to learn how they manage to do this. So, I’ve been in traffic for the last three hours and guys, I can’t seem to get any inspiration from this experience and putting down my ‘First Thoughts’ for today’s Newsletter has been quite a challenge. I have been looking from my laptop to the window repeatedly as we move at snail speed. Once or twice, I have been tempted to step out of the car to stretch my legs but hey, this is Lagos, and this is the Third Mainland Bridge! Anything can happen! Hopefully, I would get home before I am done with this piece.

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Approaching the Common Reporting Standard (CRS) Deadline: Important Information Your Financial Institution Should Know + Do

  1.  Nigeria’s Income Tax (Common Reporting Standard) Regulations 2019 (the Regulations) became effective on July 1, 2019. Nigeria’s Federal Inland Revenue Service (FIRS) is the administering agency.
  2. The Regulations places an obligation on all financial institutions in Nigeria to provide a report to the FIRS on all accounts (Reportable Accounts) maintained by their customers (Reportable Persons) that are not tax-resident in Nigeria or the United States of America (USA).
  3. Your financial institution does not need to provide a report to the FIRS on the accounts (non-Reportable Accounts) maintained by your Nigeria or USA-resident customers (non-Reportable Persons).
  4. Accordingly, and for the purpose of the Regulations, Nigeria and USA are non-Reportable Jurisdictions. All other countries are Reportable Jurisdictions.
  5. A person who has dual tax residency in a Reportable Jurisdiction and a non-Reportable Jurisdiction, is a Reportable Person and accordingly his/her account in your financial institution is a Reportable Account. For example, the accounts of a customer who is tax-resident in both Nigeria and Canada, is a Reportable Account.
  6. Your financial institution has an obligation to know the tax residence of all persons who maintain an account with it. Accordingly, you need to put in place a due diligence process that elicits this information from all your customers.
  7. Your financial institution must maintain a register, schedule or enterprise resource planning tool (ERP) (altogether, Report Register) that identifies all your Reportable Persons and Reportable Accounts.
  8. Your Report Register must contain information such as the following on all Reportable Persons and Reportable Accounts: Name, Address, Reportable Jurisdiction, Date and Place of Birth, Reportable Account Number, Tax Identification Number, Income (including interest, dividends and other income) earned by Reportable Person, and Reportable Account Balance as at end of the relevant period.
  9. Your financial institution must prepare and submit an annual Reportable Accounts Information (Information Returns) not later than Wednesday,  September 30, 2020 to the FIRS. Accordingly, Information Returns on all Reportable Persons and Reportable Accounts maintained in your financial institution in 2019 is due to be submitted to FIRS not later than Wednesday, September 30, 2020.

    Please note: The Reportable Accounts Information (Information Returns) should be submitted not later than May 31st of every year to the FIRS. Due to the COVID-19 Pandemic the deadline was extended. Please read more HERE.
  10. Your financial institution is still required to submit Information Returns even though you have no Reportable Accounts; in which case, a nil Information Returns will be filed with FIRS.
  11. FIRS may share your financial institution’s Information Returns with Nigeria’s counterpart countries further to Nigeria’s obligation under the Multilateral Agreement on the Automatic Exchange of Financial Account Information.
  12. Similar to your accounting records, your Information Returns are required to be kept for minimum of 6 years thereafter.
  13. FIRS may, by a notice in writing, additionally require your financial institution to furnish it, within a minimum of 14days, with any document or information on compliance with the Regulations.
  14. 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 your Report Register; filing your Information Returns correctly and accurately; and being ready at any time to supply FIRS with any document or information lawfully requested from your financial institution.
  15. 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 Taxaide’s International Tax Desk at: itd@localhost or business@localhost;  +234 700 TAXAIDE; +234 1 631 0971-2; +234 810 701 7274.

A Series of Tax Relief Part 2

Welcome to the second part of this series.

Last week, we looked at some of the tax reliefs that have made available by the federal government to taxpayers to cushion the effects of the COVID-19 pandemic. However, various state governments have also made some tax reliefs available to taxpayers. Some of these tax reliefs available in various states include:

The Lagos State Internal Revenue Service (LIRS) has made the following tax reliefs and palliatives for taxpayers in the State:

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A Series on Tax Reliefs Part 1

A few months back, I heard the story of a young man who was in a rather unfortunate situation. I could only sympathize with his predicament. Before the COVID-19 pandemic disrupted economic and business activities in the country, this young man had a stable job but had undergone an interview with a prospective new employer in the hope of securing a better job. Based on his performance at the interview, he had been given assurances that he would get the job. However, he was yet to receive an employment letter. This young man went ahead to quit his job at the time and was waiting for the call from his “new employers”. Fast-forward to a few months later; this young man was told that the new company could not offer him the job as the COVID-19 pandemic had seriously affected their operations and ability to recruit new personnel.

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VAT Public Notice on Non-Exempt Items

The Federal Inland Revenue Service (FIRS) issued a Public Notice on Wednesday, June 24, 2020. The Public Notice seeks to provide clarification to Paragraph 2 of the Value Added Tax (VAT Modification) Order 2020 (Modification Order) made by the Minister of Finance, Budget and National Planning (Minister) on February 3, 2020. We provide below, our synopsis and remarks on the Public Notice here. You can also find the Modification Order here.

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THE TAXAIDER NEWSLETTER VOL 2, ISSUE 6 (June 2020)

First Thoughts: The Glass Half Full

In recent times I have seen and heard reactions from a lot of people I know concerning how the year has turned out in a way most didn’t quite envisage. Some have even wished they had magic wands they could wave and make the entire year disappear or perhaps, restart. I would confess that I was one of these people for a while. Many of us had very high hopes for 2020 just like we always do at the beginning of every New Year. 2020 was quite significant however; perhaps because of the way it sounds when you pronounce it. At least, 2020 sounds a whole lot better than 2019 (or any other year before now) on the lips, don’t you think?

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