Investor Presentaiton

5.2 The Country and its institutions Business Organisation Labour and Social and Regulation Security Regulations The Nigerian Financial Tax System Services Industry Foreign Exchange Transactions Investment in Nigeria Accounting and Auditing Requirements Importation of Goods Exportation of Goods COVID-19 Economic and Fiscal Measures 5.1.21 Double Taxation Agreements45 Nigeria currently has double taxation agreements (DTAs) with the United Kingdom, Belgium, Pakistan, Romania, France, the Netherlands, Canada, Philippines, Italy (Air and Shipping only), Czech Republic, Slovakia, Singapore, Spain, China and South Africa 46. In addition, Nigeria has signed DTAs with Mauritius, South Korea, the United Arab Emirates, and Qatar. However, these treaties are yet to be ratified by the National Assembly as required under the Constitution. The Nigerian taxes to which the treaties apply include CIT, Personal Income Tax, Capital Gains Tax, Tertiary Education Tax, Information Technology Tax and Petroleum Profits Tax. The DTAs are largely based on the OECD treaty model. Personal Income Tax (PIT) The legal basis for the imposition of PIT is the PIT Act (PITA), Cap P8, LFN, 2004, as amended by the PIT (Amendment) Act, 2011 and Finance Acts, 2019 and 2020, respectively. The Operation of Pay-As-You-Earn (PAYE) Scheme Regulations 2002, issued pursuant to the PITA, forms the basis for the administration of PIT on employment income. The PAYE Scheme appoints employers of labour as agents of the tax authority for the purpose of remitting the taxes deducted from the salaries, allowances and other benefits (including benefits-in-kind) due to their employees. For this purpose, employers are required to register with the zonal office of the tax authority(ies) in the State(s) to which its employees' income taxes are payable. The Joint Tax Board (JTB) is vested with the responsibility for the general administration of PIT in Nigeria. Each State and the Federal Capital Territory has a State Internal Revenue Service (SIRS) that is responsible for the assessment and collection of PIT from persons resident (or whose employees are resident) in that State or territory. The FIRS is responsible for the assessment and collection of PIT from personnel of the Nigerian Armed Forces and the Nigerian Police Force (other than civilian employees), officers of the Nigerian Foreign Service, and non-residents who derive income or profit from Nigeria. 5.2.1 5.2.2 Residence The concept of residence is important in determining the extent of a taxpayer's liability to tax in Nigeria. It is also critical in determining the relevant tax authority (RTA) responsible for assessing and collecting the PIT of the taxpayer. Under the PITA (as amended), a person's place of residence (POR) is defined as a place available for his domestic use in Nigeria on a relevant day. This excludes a hotel, rest house or other place at which he is temporarily lodging unless no more permanent place is available for his use on that day. Where an individual has two or more PORS in different States of the Federation, his residency in Nigeria will be determined based on his principal place of residence (PPOR). PPOR is defined to include a branch office or operational site (oil terminals, oil platforms, flow stations, factories, quarries, construction site) with a minimum of 50 workers. Once a POR or PPOR is determined, the RTA is the tax authority of the territory in which the taxpayer has his POR or PPOR. Taxation of Non-resident Individuals Finance Act, 2020 introduced the SEP rule under PITA for the taxation of income earned by non-resident individuals, executors or trustees that provide technical, management consultancy or professional services to a person resident in Nigeria. The Act does not specify what constitutes a SEP but empowers the Honorable Minister of Finance, Budget and National Planning to determine through an Order what would constitute SEP for a non-resident individual, executor or trustee providing the aforementioned services. 45 Nigeria has signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting, which is a legal instrument developed as part of Action 15 of the OECD's BEPS Project to modify existing bilateral treaties to implement BEPS measures. However, Nigeria is yet to deposit its instrument of ratification with the OECD. 46 www.firs.gov.ng/Tax-Management/Pages/Tax-Treaties.aspx KPMG Credits Tax Investment in Nigeria Guide - 8th Edition 52

View entire presentation