Investor Presentaiton
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
The amount of capital allowances claimable in any year is restricted to
66% of assessable profits (accounting profits after adjustment for
tax items) for companies, other than those involved in agricultural and
manufacturing businesses.
The current rates of capital allowance are as follows:
Qualifying Expenditure
Initial
Annual
Allowance Allowance
%
%
Period
of Claim
(Years)
10
14
14
Building (Industrial and
non-Industrial)
15
10
10
Plant and Machinery:
Agricultural Production
95
Nil
Others
50
25
Motor Vehicles:
Public Transportation
95
Nil
Others
50
25
4
Housing Estate
50
25
4
Ranching and Plantations
30
50
2
Mining
95
Nil
1
Plantation Equipment
95
Nil
1
Furniture & Fittings
25
20
5
Research and Development
95
Nil
1
5.1.5
Income Tax Rates
Nigeria now operates a progressive three-tier CIT rate system. Companies
are graded and taxed according to their gross annual turnover:
small companies with less or an annual gross turnover of #25million are
taxed at 0% and exempt from minimum tax 38
medium size companies with annual gross turnover of more than
#25million but less than #100million are taxed at 20%, and
• large companies with annual gross turnover of #100million and above
are taxed at 30%.
5.1.6
These rates are applied to taxable profit to determine the CIT liability for the
relevant year. Taxable profit is based on the profit reported in the financial
statements adjusted in accordance with tax law provisions (i.e. actual profit
basis).
Notwithstanding the above, small and medium sized companies engaged
in primary agricultural production may apply to the President through
the Minister of Finance for a tax holiday for an initial tax-free period of
four years which may be renewed for additional two years, subject to
satisfactory performance.
Historically, the taxable profit of non-resident companies (NRCs) operating
in Nigeria, particularly in the oil and gas industry, was determined, in
practice, on a deemed profit basis by multiplying the company's gross
revenue from Nigeria by a 20% deemed profit rate. The effective CIT rate
of such NRCS was, therefore, 6% of their Nigerian revenue. However, in
2015 39, the FIRS issued a directive that requires NRCS carrying on business
in Nigeria to file their tax returns on an actual profit basis.
Income Tax Returns
Every company (including NRCs doing business in Nigeria) assessable
to tax under the CITA, must prepare and file on self-assessment basis
with the FIRS, an income tax return within 6 months after the end of its
accounting period. However, in the case of a new company, the returns are
to be filed within 18 months from the date of incorporation, or 6 months
after its first accounting period, whichever occurs first.
The returns include audited accounts, income tax and capital allowances
computations and the duly completed self-assessment forms. In addition to
the above documents, NRCs are required to submit a statement in writing
containing their profits from every source in Nigeria. However, an NRC that
only earns an income on which WHT is the final tax, is exempted from all
documentation requirements.
Any company which fails to file its tax returns within the stipulated time
frame is liable to a penalty of #25,000 for the first month of default and
#5,000 for each subsequent month of default.
38 Although small companies are exempt from CIT, they are required to register and file their tax returns as and when due.
39 Public Notice on Filing of Tax Returns by Non-Resident Companies under the Companies Income Tax Act, Cap C21 LFN 2004
(as amended).
KPMG
Investment in Nigeria Guide - 8th Edition 46View entire presentation