My Blog - Page 12 of 25

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.

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

As you are aware, on Tuesday, 10^th 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:

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

FINANCIAL AND TAX MANAGEMENT FOR START-UPS IN NIGERIA

In this piece, I shall be walking you through the importance of financial and tax management for start-ups in Nigeria. In recent times, Nigeria has risen to be one of the leading business locations in Africa; most significantly for start-up businesses.

Business in Nigeria is a wonderful experience when your business venture succeeds, however before success there could be great challenges and difficulties that a new business or startup must face, one of which is usually financial and tax management.

THE BLESSINGS OF FAAC DISTRIBUTIONS AND THE CHALLENGES IT POSES FINANCIALLY TO THE STATE GOVERNMENTS.

According to the latest Federation Account Allocation Committee (FAAC) Disbursement Report, released by the National Bureau Statistics (NBS), the sum of N606.20bn was disbursed in May 2020 bringing a decrease of about 22% compared to the N780.93bn from the previous month (April 2020).

The drastic decline in the revenue generated in May 2020, compared to the previous month – April 2020, is an issue of great concern and reinforces the great importance of exploiting new sectors of the economy both on the Federal and State Government levels. No need for the long story of oil not being as lucrative as it was in the past years. I assume we are all aware of this by now.

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.

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

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.
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).
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).
Accordingly, and for the purpose of the Regulations, Nigeria and USA are non-Reportable Jurisdictions. All other countries are Reportable Jurisdictions.
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.
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.
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.
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.
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 31^st of every year to the FIRS. Due to the COVID-19 Pandemic the deadline was extended. Please read more HERE.
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.
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.
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, additionally 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 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.
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.

Consumer Price Index (CPI) and Inflation Report July 2020

A Series on Tax Relief – Part 4

Welcome to the fourth part of this series.

The gift that keeps giving comes in the form of Tax reliefs and that is why we keep coming back with this series on Tax reliefs.

We have been reviewing the tax reliefs made available by the Federal and State Governments to taxpayers to cushion the effects of the COVID-19 pandemic.

A Series on Tax Reliefs – Part 3

Welcome to the third part of this series.

We have been reviewing the tax reliefs made available by the Federal and State Governments to taxpayers to cushion the effects of the COVID-19 pandemic.

So far, we have reviewed the tax reliefs made available in the following states: Lagos, Bayelsa, Kebbi, Gombe, Jigawa, Bauchi, Akwa Ibom and Yobe State. You can read them HERE.

THE TAXAIDER NEWSLETTER VOL 2, ISSUE 7 (JULY 2020)

First Thoughts:
Use and Disuse

Jean Baptiste Lamarck’s law of use and disuse remains a vital point of discourse for me. In summary, the law emphasizes that certain traits or characteristics develop based on their use or disuse and can be transferred hereditarily to progenies. I would prefer not to dwell on the somewhat controversial nature of the law, its criticisms or comparison to Charles Darwin’s Theory of Evolution among other lines of thought. Rather, I would relate the salient points of this law to our reality today.