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.