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Nigeria Corporate - Significant developments

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Court of Appeal decision on VAT on foreign services

This was an appeal against the judgement of the Federal High Court (FHC) which ruled that VAT was payable on satellite bandwidth as an imported service. The Court of Appeal (COA) upheld the decision of the Federal High Court on the applicability of VAT on services received by Vodacom from a foreign service provider (FSP). The court held that in so far as the bandwidth capacities are supplied in Nigeria, the foreign company carried on business in Nigeria within the meaning of S10(1) of VATA. The location of the Supplier is not relevant. The Court also held that the duty to remit VAT by the recipient is separate from the duty of the foreign company to register and charge VAT and not a condition precedent. The Court ruled in favour of the FIRS saying that the “destination principle” promoted by the OECD, stipulates that goods imported from a State are exempted from VAT and are instead taxed in the destination State in which the goods are imported. 

Court of Appeal: Non registration with NOTAP does not invalidate a contract

The Court of Appeal has reversed the decision of the Federal High Court (“FHC”) in Stanbic IBTC Holdings Plc (“Stanbic”) v Financial Reporting Council of Nigeria (FRCN) & Anor (2015), which had held that failure to obtain NOTAP approval (on a registrable contract) rendered the contract illegal and void; and payment could not be made on an unregistered contract.

The Court of Appeal held that NOTAP’s scope does not cover contracts for exporting technology out of Nigeria and section 7 of the NOTAP Act does not deal with or provide for the validity or legality of unregistered or non-registration of contract(s) under Section 4(d) and the NOTAP Act does not render such contracts as invalid, illegal, null and void.

Competition and Consumer protection advisory on mergers has been issued

The Federal Competition and Consumer Protection Act (FCCPA) was signed into law on 30 January 2019. The FCCPA established the Federal Competition and Consumer Protection Commission (FCCPC) and repealed the provisions of the Investments and Securities Act (ISA) relating to mergerand other business combination control.

With the passage of the Act, the FCCPC was vested with the powers to review all mergers and business combinations to ensure that such combinations do not distort or impede the markets; a function which was previously handled by the SECThe FCCPC and SEC have now issued a joint statement to clarify the status of pending applications and provide guidance for new applications.

FIRS issues guidelines on Mutual Agreement Procedure

The Federal Inland Revenue Service (FIRS) has issued Guidelines on accessing Mutual Agreement Procedure in Nigeria. The Guidelines provide guidance to taxpayers on the process for accessing Mutual Agreement Procedure (MAP) as a means of dispute resolutions as contained in the various avoidance of Double Taxation Agreements between Nigeria and other countries.

All request for MAP are to be made in writing and addressed to:

Executive Chairman (Delegated Competent Authority), Federal Inland Revenue Service, 20 Sokode Crescent, Wuse Zone 5, Abuja, FCT. Nigeria and copied to: Director Tax Policy & Advisory Department (Authorised Competent Authority)

FIRS begins enforcement of Country by Country Reporting  

The FIRS has begun to enforce compliance with Nigeria's Country-by-Country Reporting (CbCR) Regulations. Members of multinational groups that meet the CbCR threshold have an obligation to notify the FIRS of the identity and tax residence of the member of the group responsible for making the CbCR disclosure on behalf of the group.

Notification is due before the last day of the group's accounting year-end for which the CbCR relates. For taxpayers with 31 December group reporting date, the first deadline for filing the notification was 31 December 2018. The penalty for failing to file the notification is ₦5 million in the first instance and ₦10,000 for every day of default.  

Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme Order

President Muhammadu Buhari on 25 January 2019 signed a 10-page Executive Order No. 007 known as the “Companies Income Tax (Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme) Order, 2019” described as a Public-Private Partnership intervention to enable government leverage private sector funding in a manner that creates value for money through private sector discipline.

According to the President, the Scheme will enable companies that are willing and able to spend their own funds on constructing roads to their factories or farms, recover their full construction costs as tax credits, over a period.

The Financial Reporting Council of Nigeria published a new code of Corporate Governance

The Federal Government of Nigeria has unveiled the Nigerian Code of Corporate Governance (“NCCG” or the “Code”) drafted by the Financial Reporting Council of Nigeria (“FRC”). The Code seeks to institutionalise and encourage better corporate governance practices in Nigerian Companies. In particular, the Code is principle based and requires the “apply and explain” approach. Companies are to adopt the practices in the Code and explain the reasons for adopting them in line with their activities. The FRC will monitor the implementation of the Code through sectoral regulators, who will impose appropriate sanctions for infractions, based on the sectoral laws and regulations.

Executive Order on Voluntary Offshore Assets Regularisation Scheme (VOARS)

A new Executive Order (008), which takes effect from 8 October 2018, has been signed by the President of Nigeria.

According to the new order, eligible persons, entities, and their intermediaries who hold offshore assets and income are expected to declare voluntarily within 12 months and pay a one-time levy of 35% plus a 2% facility access fee in Switzerland.

Benefits to taxpayers who take advantage of the scheme include immunity from prosecution for tax offences and illicit offshore assets. Persons already under investigation for financial crimes or other corrupt practices in respect of such offshore assets are not eligible.

Court rules that companies should self-charge value-added tax (VAT) on imported services

The Federal High Court (FHC) overruled the decision of the Tax Appeal Tribunal (TAT) in Gazprom Oil & Gas Nig. Ltd vs. Federal Inland Revenue Service (FIRS). At the TAT, Gazprom Oil & Gas Nig. Ltd was able to establish that it received consultancy and advisory services from foreign/non-resident companies. On the basis that the services were wholly performed outside Nigeria, the TAT discharged the FIRS re-assessment notices based on Section 10 of the VAT Act.

The FHC identified the sole issue for determination as 'whether the supply of goods and services made by a non-resident company to a Nigerian company or person should be subject to VAT'.

FIRS issues new Transfer Pricing Regulations

The FIRS has issued the Income Tax (Transfer Pricing) Regulations, 2018.

The new Regulations incorporate the 2017 updates to the Organisation for Economic Co-operation and Development's (OECD) Transfer Pricing Guidelines and some provisions contained in the African Tax Administration Forum’s (ATAF's) suggested approach to drafting transfer pricing legislation. The Regulations also introduce administrative penalties for a wide range of offences.

Singapore ratifies Double Tax Treaty (DTT) with Nigeria

Singapore has ratified the DTT earlier signed between the country and Nigeria.

The DTT is based on the OECD Model Tax Convention and enters into force in Singapore on 1 November 2018 with an effective date of 1 January 2019. In addition to reduced tax rates, such as in the case of withholding tax (WHT) on certain income, the protocol to the DTT also provides for non-discrimination. This means any benefit, such as lower tax rate, contained in the treaty will override the provisions of the domestic law, and, at the same time, if the domestic laws subsequently provide for rates that are lower than the DTT, the lower domestic rates will apply.

Both Nigeria and Singapore have signed up to the OECD’s new Multilateral Instrument (MLI) (Action 15 of the Base Erosion and Profit Shifting [BEPS] Initiative) to amend their tax treaties. Accordingly, the DTT will eventually be amended to incorporate any new measures designed to curb BEPS.

The treaty is yet to be ratified in Nigeria by the National Assembly, which is required to give the treaty the force of law in Nigeria.

Nigeria publishes Country-by-Country (CbC) Reporting Regulations

Nigeria has formally released the Income Tax (Country-by-Country Reporting) Regulations, 2018. This follows Nigeria’s signing of the Multilateral Competent Authority Agreement (MCAA) for the automatic exchange of CbC reports in January 2016 and subsequent ratification in August 2016.

Groups headquartered in Nigeria will be required to prepare and file a CbC report with the FIRS annually. Other relevant provisions are as follows:

  • Effective date: Accounting years beginning on or after 1 January 2018.
  • Threshold and exemptions: Groups with consolidated revenue less than 160 billion Nigerian naira in the previous reporting period are exempted;
  • Filing deadlines: No later than 12 months after the last day of the multinational enterprise (MNE) group’s accounting year-end.
  • Notification deadline: Affected entities must make an appropriate notification to the FIRS no later than the last day of the group’s accounting year-end.

The Nigerian Investment Promotion Commission (NIPC) releases official gazette on list of pioneer industries and products

In November 2018, the NIPC announced the release of an official gazette of the list of pioneer industries and products. This is following the Federal Executive Council's (FEC's) approval on 2 August 2017 to update the pioneer list with 27 new industries.

There are 99 pioneer industries in the released official gazette. The industries have been arranged according to sectors and sub-sectors.

Federal government increases excise duties on tobacco and alcoholic products

The President of Nigeria, on the recommendation of the Tariff Technical Committee of the Ministry of Finance, approved an increase to the excise duties on tobacco and alcoholic beverages effective from 4 June 2018.

The increase will be introduced in phases over a three-year period from 2018 to 2020 to moderate the impact of the increase on the price of the products.

Nigeria ratifies DTT with Spain

On 26 January 2018, the Nigerian government announced the ratification of the Nigeria-Spain DTT.

The DTT was initially negotiated in June 2009 and presented to the National Assembly for ratification in 2016, alongside DTTs with Sweden and South Korea.

Nigeria signs OECD Multilateral Instruments to Curb Tax Avoidance and Evasion

On 17 August 2017, Nigeria became a signatory to two major international multilateral instruments to address tax avoidance and evasion. These are the OECD’s Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS ('Multilateral Instrument' or 'MLI') and the Multilateral Competent Authority Agreement for the Common Reporting Standard (CRS MCAA).

The MLI will cause amendments to be made to Nigeria’s existing tax treaties. The aim of these amendments is to limit treaty abuse and other forms of tax avoidance. The CRS MCAA will potentially allow the Nigerian tax authorities to automatically receive financial information on Nigerian nationals who hold bank accounts in any of the nearly 100 foreign jurisdictions that have signed the CRS MCAA.


Last Reviewed - 19 December 2018

Contacts, News and Downloads
Nigeria contacts
Taiwo Oyedele Title = Taiwo Oyedele width=55px
Taiwo OyedelePartner / Head of Tax & Regulatory Services+234 1 271 1700 ext. 50002
Russell Eastaugh Title = Russell Eastaugh width=55px
Russell EastaughPartner / Director General Tax Services+234 1 271 1700 ext. 50001
Emuesiri Agbeyi Title = Emuesiri Agbeyi width=55px
Emuesiri AgbeyiPartner / Director Tax and Private Wealth Services+234 1 271 1700 ext. 50006
Kenneth Erikume Title = Kenneth Erikume width=55px
Kenneth ErikumePartner / Director Tax Reporting & Strategy+234 1 271 1700 ext. 50004
Moshood Olajide Title = Moshood Olajide width=55px
Moshood OlajidePartner / Director Tax, Regulatory Compliance, and Advisory+234 1 271 1700 ext. 50005
Seun Adu Title = Seun Adu width=55px
Seun AduPartner / Director Tax and Transfer Pricing+234 1 271 1700 ext. 52001
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