Nigeria

Individual - Significant developments

Last reviewed - 17 July 2020

Nigeria Immigration Service (NIS) to issue electronic Temporary Work Permits (TWPs)

TWP approval is required for a skilled foreigner to perform employment duties in Nigeria on a temporary basis. Such foreigners must be sponsored by a company registered in Nigeria.

Formerly, the application had to be physically submitted and processed at the NIS headquarters in Abuja. If successful, an approval (TWP cable) would be issued by the Comptroller General of Immigration to the sponsoring company for its expatriate to utilise while applying for the TWP visa.

Nigerian government issues Amendments to Order on Voluntary Offshore Assets Regularisation Scheme (VOARS)

Nigeria’s President has issued an Executive Order amending the Executive Order 008 of 2018 on the VOARS. The Amendment Order is officially known as the Voluntary Offshore Assets Regularisation Scheme Amendments 2019(the Amendment Order).

The Attorney General of the Federation is required to set up a VOARS office within the Nigerian Financial Intelligence Unit (NFIU).

Relevant persons who are in default are given a period of 30 months, commencing from 8 October 2019, to declare offshore assets acquired during the 30-year period from 1987 to 2017.

COVID-19: FCT-IRS extends deadline for filing tax returns by three months

The Federal Capital Territory Internal Revenue Service (FCT-IRS) has announced the extension of the deadline for the filing of personal income tax (PIT) returns by three months, from 31 March 2020 to 30 June 2020. This is in response to the challenges brought about by the COVID-19 pandemic.

LIRS extends deadline for filing PIT returns by two months

The Lagos State Internal Revenue Service (LIRS) has announced the extension of the deadline for filing PIT returns by two months, from 31 March 2020 to 31 May 2020.

NIS issues new visa policy: Africans to get visa on arrival

The NIS, on 4 February 2020, launched the Nigeria Visa Policy 2020 (NVP 2020). The new policy is designed to facilitate economic activities and, in turn, economic development and national security.

President Muhammadu Buhari has signed the 2019 Finance Bill into Law

President of the Federal Republic of Nigeria, Muhammadu Buhari, has signed the Nigerian Tax and Fiscal Law (Amendment) Bill 2019, otherwise known as the Finance Bill, into law. The Finance Act has five objectives: (i) promoting fiscal equity by mitigating instances of regressive taxation, (ii) reforming domestic tax laws to align with global best practices, (iii) introducing tax incentives for infrastructure and capital markets, (iv) supporting small businesses in line with the ongoing ease of doing business reforms, and (v) raising revenues for the government by various fiscal measures.

Tax Appeal Tribunal (TAT) rules that withdrawal of voluntary pension may be taxable but it is not the responsibility of the employer

The LIRS, following a tax audit for the 2013 and 2014 years of assessment, issued a Notice of Refusal to Amend (NORA) to Nexen Petroleum Nigeria Limited ('the company'). The LIRS assessed the company for additional liabilities on the grounds that the company had under remitted Pay As You Earn (PAYE) tax by taking statutory tax relief for Voluntary Pension Contributions (VPCs) made by its employees to pension fund administrators (PFAs).

The TAT's decision addressed the following key issues:

  • That all pension contributions, including voluntary pension contributions without any limit, are tax deductible.
  • There is no requirement for the employer to ensure that a VPC was not withdrawn by the employee within a period of time to qualify for tax deduction on the contribution.
  • That the agency responsibility for an employer to deduct and remit PAYE does not extend to any tax that may become payable upon withdrawal of voluntary pension contributions by an employee from the PFA.

TAT says gratuities are not taxable

Previously, section 3 of the Personal Income Tax Act of 1993 (PITA 1993), i.e. the charging section, imposed tax on gratuities, and the 3rd Schedule to the Act exempted gratuities up to 100,000 Nigerian naira (NGN) from tax. The implication was that gratuities in excess of NGN 100,000 were subject to tax.

However, section 3 of PITA 1993 was subsequently amended by the Finance (Miscellaneous Tax Provisions) (No. 3) Decree (1996 Decree) removing 'gratuities' from taxable income. However, the exemption under the 3rd Schedule was not amended. This created an apparent conflict in that while on one hand section 3 did not specifically mention gratuities as taxable, the 3rd Schedule inferred that gratuities in excess of NGN 100,000 are taxable. This conflict created an uncertainty as to whether gratuities are subject to tax or not. The TAT stated that gratuities are not subject to tax.

LIRS to issue new tax identification numbers to taxpayers

The LIRS, on 30 May 2019, issued a Public Notice informing the public of the new Tax Identification Number (TIN), which will be issued to every individual, registered business, and incorporated company.

The new TIN is part of the deployment of a new tax administration system by the LIRS called the Lagos State Government Electronic Banking System (LASG-EBS) and the integration of the LASG-EBS Taxpayers Identification Digit (PID) with the Joint Tax Board (JTB) nationwide TIN. The new TIN will provide individuals and companies access to the LASG-EBS (a biometric based and linked to the Bank Verification Number [BVN] of the individuals or companies).

LIRS appoints employers to deduct and remit capital gains tax (CGT) on compensation for loss of employment 

The LIRS has issued a Public Notice mandating employers (collecting agents) to account for and remit CGT on termination benefits and any other capital sum paid to disengaging employees. The collecting agents are required to file, alongside their respective annual returns, a statement showing all recipients of capital sums paid by the collecting agent in the format provided by the LIRS. Nil statements are to be filed where applicable. The appointment of collecting agents for CGT purposes as contained in the Notice is effective from 1 January 2019.