RESIDENCE RULE

The Nigerian tax system is based on the principle of residence. Personal Income Tax Act defines an individual as resident in terms of his physical presence in Nigeria. While a Nigerian resident is liable to tax on his worldwide income, a non-resident is only liable to tax in Nigeria on the income derived from Nigeria.

The gain or profit from an employment will be deemed to be derived from Nigeria if:

(a)    the employer is in Nigeria or has a fixed base in Nigeria;

(b)   the duties of the employment are wholly or partly performed in Nigeria, unless:

i.                    the duties are performed on behalf of an employer in a country other than Nigeria, and the remuneration of the employee is not borne by a fixed base of the employer in Nigeria;

ii.                  the employee is not in Nigeria for a period or periods amounting to an aggregate of 183 days (inclusive of annual leave or temporary period of absence) or more in any twelve month period commencing in a calendar year and ending either within that same year or the following year; and

iii.                the remuneration of the employee is liable to tax in that other country under the provisions of the avoidance of a double taxation treaty with that other country.

The remuneration of a non-resident will not be liable to tax if all the conditions listed in (b) above are met. This also implies that a non-resident employee from a country with no DTA with Nigeria is automatically liable to tax in Nigeria.

TAX RETURNS

Taxpayers must without notice or demand file tax returns to the appropriate tax authority in the manner and form prescribed by the applicable laws. The Nigerian self-assessment system enables the taxpayer to assess and calculate tax liability, make payments and file returns to the tax authority.

All companies (resident or non - resident), including those granted tax exemption are required to file their tax returns to the relevant tax authority every year.

Below is a table of the filing due date of taxes as prescribed by the applicable laws:

   

S/N	Applicable Tax	Filing Due Date of Returns
1.	Company Income Tax	The earlier of 18 months after incorporation or 6 month after the end of the company’s accounting date for new companies, within 6 months of the end of the company’s accounting year for old companies.
2.	Value Added Tax	By the 21st day of the month after the transaction
3.	Personal Income Tax	PIT:  Within 90 days from the commencement of the Year of Assessment. PAYE:  On or before 31st January of every year.
4.	Petroleum Profit Tax	Within 2 months after the commencement of each accounting period.

Register for the Tax Masters Training on the following topics:

• “Key Issues In Nigerian Tax” scheduled to hold on 7th April, 2017 at the Sheraton Hotel, Ikeja              Lagos, and;
•  “What You Need to Know About Tax” scheduled to hold on 5th May, 2017 at Chelsea Hotel,                Central Business District, Abuja.

Time: 10am
Fee: N70, 000

For highlights of the Training click: http://taxmastersclass.blogspot.com.ng/2017/02/highlights-of-tax-masters-special.html

Click  https://lnkd.in/duCAvdZ to register.

TAX MASTERS

The Tax Masters Training is designed to simplify tax issues, broaden tax knowledge and an opportunity to discuss real life tax issues with our seasoned Facilitators. To register click on this link: https://lnkd.in/duCAvdZ The Training is scheduled to hold on: • 7th April, 2017 at the Sheraton Hotel, Ikeja Lagos, and; • 5th May, 2017 at Chelsea Hotel, Central Business District, Abuja. Time: 10am Fee: N70, 000

TAX MASTERS EARLY BIRD DISCOUNT

To register click on: https://docs.google.com/forms/d/e/1FAIpQLSdUZv3UdonRGey-fIRRH1RdBi33XeERPmTys0XE3Uvb4TSUCw/viewform

and fill the registration form.

TAXABLE BENEFITS OF INDIVIDUALS

Benefits In Kind (BIKs) is defined as an expense incurred by an employer for the personal benefit of employees and includes company cars, free or subsidized accommodation etc. For tax purposes, BIKs are deemed to be additional income accruing to the employees in the course of employment and are therefore taxable.

Any benefit, salary, wage, fee, allowance, compensation, bonus, premium, or other perquisite enjoyed by an employee (whether temporary or permanent) in Nigeria are subject to tax, and form part of the employees’ gross emolument.

Under the Personal Income Tax Act, when an employer’s asset is enjoyed by an employee for his personal benefit, the deemed value of such benefit accruing to the employee is 5% of the annual acquisition cost if known, or 5% of the market value of the asset at the time of acquisition as determined by the revenue.

Furthermore, where the employee enjoys the benefits of assets rented or hired by the employer, the employee shall be treated as being in receipt of emolument on the amount incurred by the employer.

The implication of the above is that all such amounts as determined thereof shall form part of employment benefits of the employee, and are taxable.

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.

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.