Nigeria: Regulatory Summary Of 2018 – Corporate Tax

Last Updated: 11 October 2019
Article by Oladimeji Sarumi

Just recently, the Executive Chairman of Federal Inland Revenue Service ("FIRS") announced that its revenue generation target for 2019 is N8 Trillion. With this target, we believe that the FIRS will continue with the aggressive tax drive that characterized its activities in 2018. FIRS generated a record breaking N5.3 Trillion 2018 despite fluctuating crude oil prices which averaged $70 per barrel. The FIRS is also more likely to become more creative and issue more regulations in 2019 geared towards increased revenue generation.

Faced with a rising debt profile and dwindling crude oil prices, the Federal Government needed to increase its non-oil revenue in order to finance its budget. This led the FIRS to oversee many tax reforms or regulations in 2018, all geared towards increasing internally generated revenue of the Federal Government. These developments in taxation are unprecedented in Nigerian history.

In this article, we have highlighted some of the significant tax regulations and changes introduced in 2018:

1. Income Tax (Country by Country Reporting) Regulations

The FIRS released the Income Tax (Country by Country Reporting) Regulations, 2018 ("CbCR Regulations" or the "Regulations"), which marks yet another significant step by the Federal Government in its quest to align the Nigerian tax system with outcomes of ongoing international tax reforms.  Although Nigeria is not a member of the Organisation for Economic Cooperation and Development ("OECD"), it has, nevertheless, been taking steps to adopt and implement the initiatives emanating from the OECD Base Erosion and Profit-shifting ("BEPS") program.  It is in line with its commitment towards implementing the OECD BEPS framework that Nigeria signed the Multilateral Competent Authority Agreement for the Automatic Exchange of Country-byCountry Reports ("CbC MCAA") on 27 January 2016, and released the CbCR Regulations. Whilst the Regulations were issued in June 2018 they were given retroactive effect from 1st January 2018. The CbCR Regulations apply only to Multi-National Enterprises ("MNE") Groups that meet certain criteria. The CbCR Regulations have the laudable aim of extracting more transparent information on the economic and fiscal activities of MNE Groups, which will enable tax authorities to better assess and combat tax evasion and avoidance risks. However, there are growing concerns that the Regulations may significantly increase the compliance burden of taxpayers and thereby make the whole compliance process a cumbersome task. 

2. Nigeria Income Tax (Transfer Pricing) Regulations 2018

The FIRS released new Transfer Pricing ("TP") Regulations with an effective date of 12 March 2018. The TP Regulations incorporate some of the 2017 updates to the OECD's TP Guidelines and some provisions contained in the African Tax Administration Forum's (ATAF) suggested approach to drafting TP legislation. The Regulations also introduced administrative penalties for a wide range of offences. In addition to giving effect to the relevant provisions of the Companies Income Tax Act ("CITA"), Petroleum Profits Tax Act ("PPTA") and Personal Income Tax Act ("PITA"), the new Regulations have expanded this list to include the Capital Gains Tax Act and the Value Added Tax Act. Another significant change in the new TP Regulations is the replacement of the concept of "connected taxable persons" with "connected persons", now broadly defined to include persons considered to be related or associated under the United Nations and OECD model tax conventions and TP Guidelines. The Regulations apply to foreign and domestic related party transactions. Taxpayers need to pay a lot more attention to their TP affairs and should evaluate how the new Regulations will impact them. With the new Regulations, taxpayers who are behind on compliance must take steps to quickly address all noncompliance. In addition, taxpayers must ensure that going forward, they are able to comply as and when due.

3. Voluntary Assets and Income Declaration Scheme (VAIDS)

Whilst this was a 2017 initiative, we have included it because the timeline for voluntary declaration was extended to June 2018. VAIDS was an initiative designed by the Federal Government to encourage tax defaulters to voluntarily disclose their previously undisclosed income and to pay all outstanding taxes in exchange for immunity from prosecution. The main objective of VAIDS was to increase the number of taxpayers in the tax net and raise more revenue for the government. Specifically, it was expected to increase Nigeria's tax to GDP ratio from the current 6% (at the time of the introduction of VAIDS) to between 10% and 15%, broaden the national tax base, curb tax evasion and discourage illicit financial flows. The FG found this measure expedient to change the country's tax narrative. According to an IMF survey, it is difficult for any country to achieve sustainable development with a tax to GDP ratio under 15%. Tax is however not a stand-alone issue, other measures need to be put in place to compliment the Scheme including a comprehensive tax law reform, simplification of tax compliance, transparent reporting of tax revenue and utilisation.

4. Voluntary Offshore Assets Regularisation Scheme (VOARS)

The Nigerian Government's drive to boost non-oil revenue is clearly evident with intensified tax audits, increase in treaty networks, promulgation of new TP Regulations and the launch of tax amnesty schemes. While the recently concluded VAIDS was applauded by various stakeholders, the newly introduced Voluntary Offshore Assets Regularisation Scheme (VOARS) has not received similar commendation. The VOARS, which was introduced by Presidential Executive Order 8 (VOARS Order) on 8 October 2018 seeks to provide an incentive for taxpayers who have defaulted in the payment of taxes in respect of their offshore assets and foreign-sourced income to voluntarily declare their offshore assets and regularize their tax affairs. The VOARS Order has generated varied reactions as many stakeholders are unclear on how it will be implemented. In essence, the Order mandates Nigerian taxpayers who hold offshore assets and incomes to, within a period of 12 months, voluntarily declare those assets and pay taxes on them. VOARS provides a platform for taxpayers who have defaulted in the payment of their taxes, to voluntarily declare all offshore assets and foreign-sourced income relating to the preceding 30 years of assessment and pay a one-time levy of 35% on all offshore assets in lieu of payment of outstanding taxes amongst other benefits. The Scheme is scheduled to run for a 12-month period commencing 8 October 2018. The Scheme seeks to provide some form of clemency to taxpayers who would take the opportunity to regularize their tax affairs. The benefits being offered by the VOARS are:

  • permanent waiver of criminal prosecution for tax offences and other offences relating to the offshore assets;
  • immunity from tax audit of the declared and regularized offshore assets;
  • waiver of interest and penalties on the declared and regularized offshore assets;
  • receipt of Offshore Assets Regularization Compliance Certificate on the declared and regularized offshore assets; and
  • freedom to use and invest duly regularized offshore asset in any manner in Nigeria or oversea.

Any defaulting taxpayer who fails to take advantage of the Scheme will be liable to the tax due, the interest on the same, investigation, charges and enforcement procedures in respect to offshore assets held anywhere in the world.

5. The Guidelines on Voluntary Contribution Under the Contributory Pension Scheme

The National Pension Commission ("PenCom") released the Guidelines in 2018 aimed at providing clarity on voluntary contributions under the Contributory Pension Scheme. One of the main objectives of the Guidelines is to establish a uniform set of rules for the operation of voluntary contributions as well as define eligibility criteria for participation. The Guidelines apply to all voluntary contributions. The Guidelines also listed the persons who are eligible to make the voluntary contributions. These Guidelines have the following tax implications:

  • Income accruing on voluntary contributions is taxable where the withdrawal is made before the end of five (5) years from the date the voluntary contribution was made. See Section 10(4) of the Pension Reform Act 2014;
  • With regards to certain eligible persons, tax deductions in respect of voluntary contributions are based on both the principal amount and the income earned where withdrawals are made in less than five (5) years from the date of the contribution.
  • The Pension Fund Custodians are mandated to remit all taxes deducted to the relevant tax authority within 21 days following the end of month of the deductions. The Custodians are also required to render returns of such remittances to PenCom twice in a year.

6. Display of VAT Registration Certificates at Taxpayers' Premises

The FIRS notified the general public through a circular that it had started the issuance of VAT certificates to all new and existing registered taxpayers for VAT purposes. Through the circular, the FIRS directed all VAT agents to display their VAT certificates at their business premises. It is instructive to point out that the VAT Act itself does not make any provision for the display of a certificate at the business premises. The question that bothers the mind is whether the FIRS can by a circular add to or reduce the requirements provided under the Act. Is the circular a subsidiary legislation? Does it have the same effect as the VAT Act? This becomes critical when one considers the position of the law as regards the status of a subsidiary legislation vis-à-vis the principal legislation.

7. Appointment of Banks as Agents for the Collection of Outstanding Taxes

This is the most controversial action taken by the FIRS in 2018. The FIRS and some State Internal Revenue Services issued letters to Nigerian Banks appointing them as agents for the collection of taxes from alleged tax defaulters. In the said appointment letters, the FIRS instructed the banks to: (a) set aside the amounts purportedly due as tax from the bank accounts of alleged defaulting taxpayers; (b) remit the same to the accounts of the relevant tax authorities and (c) inform the relevant tax authorities of any transactions on the tax defaulter's account and obtain the approval prior to execution of such transaction. According to the FIRS, this letter was issued pursuant to the provisions of Section 31 of the Federal Inland Revenue Service (Establishment) Act, Section 49 of the Companies Income Tax Act and Section 50 of the Personal Income Tax Act. This action, we opine, erodes the banker-customer confidentiality agreement. More so, it is a flagrant breach of the taxpayer's right to a fair hearing as it presumes the guilt of the taxpayer without following the due process.

8. Value Added Tax Modification Order for the Power Sector

This Order sought to provide clarity on the applicability of VAT to operators in the Nigerian Electricity Supply Industry (NESI). The Order applies to generating companies (Gencos), Transmission Company (TransCo) and Distribution Companies (DisCos). The Order equally applies to Nigeria Bulk Electricity Trading Plc (NBET). The Order is intended to provide the legal basis for a single point of VAT collection in the electricity value chain, which is at the point of sale of electricity from DisCos to final consumers. It is noteworthy that the exemptions in the Order are not all-encompassing as they appear inapplicable to the direct sale of electricity by the Independent Power Producers (IPPs) to the DisCos, direct sale of electricity by captive power generators to final consumers, and sale of gas to gas midstream companies who eventually sell to GenCos. This does not appear to be the intention of the Order, considering that it seeks to provide exemption for companies operating within the power value chain.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions