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For the Records: Nigeria’s 2017 tax diary a review of the major tax events of the year


Taiwo Oyedele

You can describe 2017 as a challenging and taxing year, and you will be right on the money.

A lot happened in the tax space which was reflective of the drive by government at all levels to collect more tax revenue and to expand their tax bases. This effort did not yield the desired result as Moody downgraded Nigeria’s credit rating essentially due to the country’s low non-oil revenue profile.

Beyond tax revenue generation, there was increased focus on improving the ease of doing business and paying taxes. The impact of the measures taken yielded a positive result as Nigeria moved up 24 places on the ease of doing business ranking and 11 places on the ease of paying taxes.


2017 was also a year of record budget figures, at least in nominal terms, from over 1 trillion naira in Cross River and Lagos states to over 8 trillion at the federal government level. This article seeks to summarise the major tax events of the year.
Tax policy and business reforms

The Federal Government of Nigeria approved the 2016 Fiscal Policy Measures which allowed the implementation of the Supplementary Protection Measures and the ECOWAS Common External Tariff (CET) 2015-2019. A key feature of the implementation plan is the reduction of import duty rates on specific items on the national list.

A new National Tax Policy was approved by the Federal Executive Council and a committee to drive implementation was setup.

Following its mandate to improve the ease of doing business in Nigeria, the Presidential Enabling Business Environment Council (PEBEC) made commendable changes to the process of company incorporation in Nigeria including consolidating company incorporation forms into a single form, decentralizing the registration process, introducing a public search window, and automating the incorporation process.

The Federal government also introduced some modifications to the immigration procedures. Some of those changes include the expansion of activities that can be carried out on a business visa, a reduced approval period for visa on arrival (VoA), the opening of 28 new production centres for residence permits and the decentralization of the reissuance of missing passports or those requiring biodata changes. Meanwhile the Nigeria Immigration Service (NIS) announced that effective from 1 January 2018, National Identity Numbers will be required for all International Passport applications (including renewals).

In April 2017, the Central Bank of Nigeria (“CBN”) released a circular establishing the Investors and Exporters Foreign Exchange Window. This helped the country to attract private sector foreign exchange which has stabilised the Naira exchange rate.


The federal government issued some Executive Orders in May 2017 one of which was the Executive Order Promoting Transparency and Efficiency in the Business Environment. The Order focused on reforms in company registration, removing bottlenecks in government approvals, creating sanity in port operations and facilitating the ease of obtaining visas.

VAIDS was formally launched on 29 June 2017 supported by an Executive Order NO. 004 of 2017. The Scheme commenced on 1 July 2017 and was to last for 9 months. VAIDS was designed to encourage taxpayers to voluntarily disclose assets and income previously undisclosed and pay all outstanding taxes for the preceding 6 years from 2011 to 2016.

The Federal Executive Council approved the establishment of a Road Trust Fund (RTF). The aim of the RTF is to incentivize private sector participation in development of federal road infrastructure through a tax credit scheme.

Following a period of suspension to review the pioneer incentive scheme, the federal government approved a new list of 27 additional industries and products eligible for the pioneer status incentive. Mineral oil prospecting and production was removed with immediate effect while cement manufacturing will cease to be a pioneer industry after 3 years.

Nigeria signed a double taxation treaty (DTT) with Singapore but yet to be ratified by the National Assembly to give legal effect. Currently, Nigeria has signed DTTs with 19 countries but only 13 have been ratified.

The guidelines on the Export Expansion Grant Scheme were revised. The negotiable duty credit certificate (NDCC) was replaced with the Export Credit certificate (ECC) which can now be used to settle all federal taxes, as well as purchase government bonds and repay government credit facilities.

In October, the Nigerian Investment Promotion Commission (NIPC) and the FIRS published a compendium of investment incentives in Nigeria. The compendium is a compilation of the fiscal incentives in Nigerian tax laws, as well as sector-wide fiscal concessions duly approved by the federal government and supported by legal instruments.

The Finance Minister announced a spread of 5% over the Monetary Policy Rate (MPR) for the purpose of determining interest payment for tax defaults. With MPR at 14%, interest for applicable tax default is 19%.


Tax Administration
FIRS took steps to enforce compliance with the Stamp Duties Act. Many taxpayers received letters from the FIRS requesting for evidence of payment of duties on relevant transactions. The FIRS also enforced the payment of 30% income tax on interim dividends, a move seen as a wakeup call for taxpayers to pay attention to all their tax obligations regardless of whether the enabling laws have historically been enforced.

The Lagos State Internal Revenue Service (LIRS) issued a number of public notices aimed at providing clarity on a number of ambiguous provisions such as what constitutes “reasonable removal expenses” for the purpose of tax exemption; taxation of interest benefit on loans granted to employees; taxation of employees’ share schemes; matters relating to taxation of non-nationals; taxation of accommodation benefit provided by employers; conditions for tax deductibility of interest on property loan and the deductibility of life premiums (excluding the savings component).

Both the LIRS and the Joint Tax Board issued Notices on voluntary pension contributions to curb possible abuse. PENCOM also issued a directive to PFAs and PFCs to limit the frequency of withdrawals that can be made to once every 2 years and tax any amount withdrawn within 5 years.

The FIRS and the FCT-IRS issued a joint statement informing taxpayers that the FIRS will cease to collect taxes and levies in the FCT which it previously collected on behalf of the FCT-IRS. The latter will henceforth collect the relevant taxes in the FCT and issue clearance certificates.

The FIRS approved payment a temporary window for the payment of foreign currency tax debts in Naira at the rate of N325/US$. The concession covered taxes due up to 31 December 2016 and payment was required to be made on or before 14 December 2017. Payments after 14 December 2017 are to be made in the currency of transaction.
Tax Laws and Regulation

There were no new taxes imposed by the federal government and no changes in tax rates other than import duties.

The Senate passed the Petroleum Industry Governance Bill (PIGB), the first of the Bills split out of the old Petroleum Industry Bill.

A Bill to amend the National Housing Fund and increase the minimum income threshold for mandatory contributions among others was introduced at the House of Representatives.

The Kano State government introduced a 5% consumption tax on goods and services bought or rendered in any hotel, restaurant, eatery, bakery, takeaway, suya spot, shopping mall, store, event centre and other similar businesses within the State. This move has been challenged at the Federal High Court.

A Bill seeking to repeal the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act (FEMMPA) 1995 was introduced at the National Assembly. The Bill is known as the Foreign Exchange (Control and Monitoring) Bill 2016. Among others, the it seeks to grant more powers to the CBN to regulate the forex market without requiring any approval from the finance minister, regulate foreign currency transactions performed in a foreign country which will have effect in Nigeria, extend the period within which a Certificate of Capital Importation (CCI) must be obtained from 24 to 48 hours and the prohibition of payments in foreign currency for goods and services in Nigeria.
The Stamp Duties Act (Amendment) Bill, 2017 was introduced to the National Assembly and is currently undergoing legislative process. The definition and scope of a “stamp” was expanded to include electronic, internet and Point of Sale (POS) transactions. The Bill also seeks to legalise the controversial imposition of stamp duty on bank deposits, as well as bring about a substantial increase in applicable penalties.

Tax Justice and Dispute Resolution
The Federal High Court in Abuja granted an interim injunction restraining the Kano State Revenue Service from imposing the consumption tax on certain goods and services. However a final decision is yet to be reached in this case.

In a suit between the Nigeria LNG Limited (NLNG) and the Nigerian Maritime Administration and Safety Agency (NIMASA), the Federal High Court ruled that NLNG is not subject to NIMASA fee and Cabotage surcharges. The decision settled the long running dispute on whether NLNG is, in the light of the exemptions granted under the NLNG Act, subject to NIMASA fees and Cabotage surcharges.
It was disappointing that the Tax Appeal Tribunal was not reconstituted in 2017 hence the year witnessed very low level of activities in the tax dispute resolution space.

The Global Stage
There was a leak of secret financial information (“Paradise Papers”) considered to be motivated largely by tax avoidance. The United States “Tax Cuts and Jobs Act of 2017” was enacted. It seeks to reduce tax rates for businesses and individuals in a move considered the biggest US tax reform in a generation.

Taiwo Oyedele is the Head of Tax and Regulatory Services at PwC Nigeria and Tax Leader for PwC West Africa. He is an author and public speaker on tax, business and economic matters.

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