CIRCULAR ON NATIONWIDE IMPLEMENTATION OF THE CASH-LESS POLICY

On 21^st February, 2017, the Central Bank of Nigeria (CBN) issued a circular titled “Circular on Nationwide Implementation of the Cash-Less Policy”

The circular seeks to extend the Cash-Less Policy to the remaining 30 states of the Federation.

The Circular re-introduces charges on deposits and also reviews the current charges on cash deposits and withdrawals. The new rates are indicated in the table below:

	AMOUNT	DEPOSIT	WITHDRAWALS
INDIVIDUAL	Less than N500,000	No Charges	No Charges
	N 500,000- N 1M	1.50%	2%
	Above N 1M- N 5M	2%	3%
	Above N 5M	3%	7.50%
CORPORATE	Less than  N 3,000,000	No Charges	No Charges
	N 3M-10M	2%	5%
	Above  N 10M- 40M	3%	7.50%
	Above  N 40M	5%	10%

EFFECTIVE DATE

Distinct timelines were adopted in the implementation of the policy in different states of the Federation. The implementation of the charges will take effect as follows: 

·          From 1^st April 2017, the new charges will take effect in Lagos, Ogun, Kano, Abia, Anambra, Rivers State and the FCT.

• On 1^st May 2017, the policy will be implemented in the following states: Bauchi, Bayelsa,   Delta, Enugu, Gombe, Imo, Kaduna, Ondo, OSun and Plateau. 

• On 1^st August 2017, the policy shall be implemented in Edo, Katsina, Jigawa, Niger, Oyo, Adamawa, Akwa-Ibom, Ebonyi, Taraba and Nasarawa State.

• On 1^st October 2017, the policy shall be implemented in the following states: Borno, Benue, Ekiti, Cross- River, Kebbi, Kogi, Kwara, Yobe, Sokoto and Zamfara.

 Income generated from the above transaction charges will be shared between the CBN and the banks in the ratio of 40:60

EXEMPTIONS

The following are exempted from the policy:

• ·        Revenue generating accounts of the Federal, State and Local Governments. ( lodgments only); and
• ·         Embassies, Diplomatic Missions, Multilateral and Aid Donor Agencies in Nigeria.

  Download the Circular here:  https://dochub.com/taxmasterstraining/Q6nXBo/circular-on-nationwide-implementation-of-cash-less-policy?dt=266s7lylmin5x4cw

WITHHOLDING TAX IN NIGERIA

Withholding Tax (WHT) was introduced in Nigeria in 1977 with limited coverage to rent, dividends and directors fees. WHT has been expanded to include: -

·         all aspect of building, construction and related services;

·      all types of contract and agency arrangement, other than outright sale and purchase of goods and property in the ordinary course of business;

·         Consultancy, Technical and Professional services;

·         Management services;

·         Commissions;

·         Interest; and

·         Royalty.

WHT will not apply where a manufacturer delivers its normal products to its dealers or distributors for sale; and where there is dual relationship, for example a manufacturer requesting for supply of raw materials for the manufacturing of its products from a defined supplier.

Incomes earned by non – resident companies for services rendered outside Nigeria are generally not liable to WHT since the income itself would not be liable to Nigerian tax.

WHT do not constitute the final tax for companies operating in Nigeria, except for cases such as interest and dividend.  A tax payer is expected to obtain withholding tax credit notes from the relevant tax authority via the taxable party that withheld the tax. Unutilised WHT tax credit can be set off against future income tax.

APPLICABLE WHT RATES

The applicable WHT rates on transactions or services involving companies and/or individuals are specified in the table below:

Types of payment	Applicable rates for Companies	Applicable rates for Individual
Dividends, Interest, Rent	10%	10%
Directors Fees	10%	10%
Royalties	10%	5%
Commission, Consultation, Technical, Service Fees	10%	5%
Management fees	10%	5%
Construction/Building Contracts	5%	5%
Contracts, other than outright sales  and purchase of goods in the ordinary course of business	5%	5%

Note that countries that are parties to bilateral Double Taxation Treaties with Nigeria are granted a reduced rate of WHT.

WHT IMPLICATIONS ON NON RESIDENT COMPANIES/ENTERPRISES

In practice, non-resident companies are not authorized to deduct any type of WHT. These categories of enterprises are practically outside the regulatory monitoring and control of the Tax authorities. 

Read the article here: https://dochub.com/taxmasterstraining/8PM9Bm/withholding-tax-taxmasters?dt=c1e4tigrxiiifh61

Click http://taxmastersclass.blogspot.com.ng/2017/02/tax-masters-training.html 

for information on Tax Masters Special Training and https://docs.google.com/forms/d/e/1FAIpQLSdUZv3UdonRGey-fIRRH1RdBi33XeERPmTys0XE3Uvb4TSUCw/viewform 

to register for the training.