Income Tax Country-by-Country Reporting Regulations, 2018 - Legal Alert

Proshare

Thursday, 29 November 2018      07:04PM  / Oserogho & Associates

 

Introduction and Objectives

 

In furtherance of enforcing the existing Tax Laws and Regulations, while also promoting global best tax practices, the Federal Inland Revenue Service (“FIRS”) with the approval of the Federal Minister of Finance recently published the Income Tax (Country–by–Country Reporting) Regulations, 2018 (“CbCR”).

 

As with other recent Tax Regulations, the CbCR has as one of its key principal objective the collection of data on global commercial taxable transactions by Multinational Enterprises (“MNES”), with their Constituent Entities that are tax resident. This data collection objective will enable FIRS to better assess these entities tax obligations thereby reducing, if not eliminating, Tax Evasion, Tax Avoidance Schemes and other International Transfer Pricing Risks.

 

 

MNEs CbCR Filing Obligations

The CbCR requires every MNE, with its Subsidiary or Constituent Entity (“CE”) that is tax resident, to file a Country–by–Country Report (“CbC Report”) with the FIRS not later than twelve (12) calendar months after the last reporting day of the MNE and or of its CE accounting year end.

 

A CE of a MNE that is not the ultimate Parent Entity or the Surrogate Parent Entity is also required to notify FIRS of the identity and the tax residence of its MNE or Reporting Entity.

 

Some of the exceptions to the CbC Report Filing obligations includes MNEs that are not obligated to file such Report in their tax resident jurisdiction; or a MNE that is a tax resident of a country with whom an International Multilateral Qualifying Competent Authority Agreement has been signed, or the jurisdiction of the MNE tax residence has not notified FIRS of any systematic failure in such a jurisdiction.

 

Signatories to the latter Agreement can be found here https://www.oecd.org/ctp/exchange-of-tax-information/CbC-MCAA-Signatories.pdf

 

Contents of CbC Report

 

A CbC Report is required to disclose, for each jurisdiction in which the MNE or CE carries on business, amongst other things the aggregate of its stated capital, revenue or turnover, profit or loss before income tax, any Income tax paid, any income tax accrued/outstanding, its accumulated earnings, number of employees and tangible assets other than cash or cash equivalent.

 

All CbC Reports must be filed not later than Twelve (12) Months after the last day of the MNE’s Accounting Reporting Year end. CbC Reports are not however to be used for Transfer Pricing adjustments.

 

Non-Compliance and Penalties

 

Where a MNE or other Reporting Entity fails to file its CbC Report within the stipulated timeframe already disclosed above, FIRS is entitled to impose an Administrative Penalty of N10,000,000 (Ten Million Naira) in the first instance and N1,000,000 (One Million Naira) for each subsequent month in which the default continues.

 

Similar Administrative Penalties as stated above will apply to other cases of incorrect or false CbC Reporting, and to not providing CbCR notification to FIRS.

 

Statutes vs. Regulations

 

It is very commendable that global economies are now collaborating with each other, more than ever before, in collating data of international commercial transactions especially where the intent of such multinational transactions are to evade or avoid tax obligations.

 

It is however an elementary principle of Law that Statutory Provisions take precedence as Superior Law to any Regulations, Guidelines or Circulars issued in furtherance of such a Statutory Provision.

 

There are already Statutory Provisions in the Companies Income Tax Act (“CITA”) regarding the identification of tax resident and non-resident Companies, the returns and disclosures that must be filed by these Companies, the Penalties for the non-filing or delay in filing these Returns, including the making of false statements in the returns filed.

 

The Monetary Penalties in CITA for disclosure and filing defaults are arguably much less than the Administrative Penalties in the CbCR. It will be therefore very interesting to receive some Judicial Pronouncement when some of these CbCR Administrative Penalties are challenged on which penalties for none compliance will be applicable.

 

Proshare Nigeria Pvt. Ltd.

 

Disclaimer

This is a free educational material. It does not serve as a source of solicitation, advertisement or the offering of legal services or advice of any kind. No Client/Attorney relationship is therefore created. Readers are strongly advised to always seek from qualified Legal Practitioners, competent legal counseling to their specific factual situation.

 

Intellectual Property Protected!

This material is protected by International Intellectual Property Laws and Regulations. This material can therefore only be reproduced or re-distributed for non-profit educational purposes under the strict condition that our Authorship of this material is explicitly acknowledged, and our above Disclaimer Notice is prominently displayed. 

 


Proshare Nigeria Pvt. Ltd. 

 

LATEST Developments in the Market

1.       FIRS issues Public notice on Implementation of the Revised 2018 Transfer Pricing Regulations  Oct 22, 2018

2.      Senate Passes Resolution Mandating CBN To Suspend Bank ATM Charges

3.      NASSBER Bills – A Status Update On Market Related Legislation

4.      Stakeholders explore the Role of IST in Nigerian Capital Market Dispute Resolution

5.      Regulatory Conversations – A Public-Private Dialogue Holds On Sept 18, 2018

6.      Buhari Signs Law Separating NFIU from EFCC

7.      Unconstitutional, Null And Void - Legal Opinion On Preservation Of Suspicious Assets Order

8.     The Draft Nigerian Code of Corporate Governance 2018 For Your Input

9.      2018 Nigerian Code of Corporate Governance: Sectorial Codes to Serve as Guidelines - FRC

10.  Landmark FHC Judgment On The Information Rights of Investors In The Nigerian Capital Market

11.   Executive Summary of Changes to CAMA

12.  Senate Passes New CAMA Bill into Law; Lists Seven Benefits

13.  Finance and Accounting Outsourcing

14.  Judgment Delivered Against Plaintiff In First Nigerian Case on ATM Dispense Error

15.   Communique of the 58th Annual General Conference of the NBA

16.  IFRS Reporting – Matters Arising On Derivatives

17.   Corporate Governance As A Strategy For Investment Drive – August 2018

18.  Nigerian Patient’s Bill of Rights: 5 Things to Note

19.  IFRS 15 Implementation Efforts of 2018 Interim Reporters in the Oil and Gas Industry 

 

Proshare Nigeria Pvt. Ltd.

 

NB: This Legal Alert is a free educational material, for your general information and enlightenment ONLY. This Alert, by itself, does not create a Client/Attorney relationship. Recipients are therefore advised to seek professional legal counselling to their specific situations when they do arise. Questions, comments, criticisms, suggestions, new ideas, contributions, etc are always welcomed. This Legal Alert is protected by Intellectual Property Law and Regulations and is reproduced by Proshare Nigeria Limited under permission, for the Proshare online investment community, from Oserogho & Associates [ contactus@oseroghoassociates.com ]

 

 

Related Legal Alerts

1.       UUBO Hosts Groundbreaking Thought Leadership Forum on ICE, December 6, 2018, in Lagos

2.      The Finance Function Of The Future: Using IFRS 17 To Build A Competitive Advantage

3.      IFRS 16 to Fuel Use of JVs to Avoid Lease Capitalisation

4.      How Government And Its Agencies Can Be More Efficiently Run – The BOI Example

5.      New Transfer Pricing Regulations, Guidelines and Circular - Legal Alert

6.      #NES24: Executive and Legislature must Work Together For Nigeria’s Progress-Saraki

7.      Senate Passes Resolution Mandating CBN To Suspend Bank ATM Charges

8.     ADR - Alternate Dispute Resolution Multi-Door Court House – Legal Alert

9.      Copyright Collective Societies'' Regulations Revisited - Legal Alert

10.  Shares Pump and Dump Schemes - Legality - Proshare Jul 18, 2018

11.   Sales Tax versus VAT: Supremacy - Case Law Review

12.  Fire Safety Compliances and Regulations

13.  Admissibility Of Evidence As It Relates To Electronic Devises, Social Media And Forensic Science

14.  New Requirements For Registration Of Charges (Form CAC8) Takes Effect April 3, 2018

15.   Court Approves Website Seizure and Anton Piller Order Against Online Copyright Piracy Platform

16.  Hotels and Restaurants Consumption (Fiscalisation) Regulations

17.   Court Grants Injunction Restraining Lagos State From Enforcing New Consumption Tax Law

18.  The New Land Use Charge Law of Lagos State - Proshare

19.  Police Powers of Arrest and Civil Contracts

20. Stakeholders harp on robust PPP, at 2017 BusinessDay Education Summit

21.  Corporate Governance and Directors' Remuneration - Proshare

22. S. 306 of ISA 2007 and Whistleblowers in Nigeria - Proshare

23. Stamp Duties on Bank Deposits and Transfers: Are There Unresolved Issues?

24. IFRS 9 Standard Implementation: Building Organisational Capacity for Implementation Success

25.  Bank Charges: Role, Responsibilities and Rights

26.  Bank Charges & Recent Regulatory Guidelines

27.  Legal Update On The Implementation Of The Stamp Duties Act And The Rights Of Bank Customers

28. How Recent Environmental, Waste and Effluent Law & Regulations Affect You

29. Indonesia Issues New Regulation Regarding PLCs' Shareholding Reporting Obligations

30. Contracts - Time Is Of The Essence 

31.  Nigeria's new Immigration Regulations 2017 

32. The Law, The Environment And Permissible Noise Levels  

33. Advancing the Role and Effectiveness of Audit Committees 

34. House Passes Federal Competition Commission Bill  

35.  Registering a Business in Nigeria: Preliminary Considerations 

36. PEBEC approves 60-day action plan on Doing Business in Nigeria 

37.   Annual Minimum Corporate Compliances  

38. You've Registered Your Trademark, What Now? Tips on Maintaining Trademark Protection 

39. Why FGs Ban of Vehicle Imports Through Land Borders Makes Sense

40.  While Nigeria Dithers, 3 in 4 African Countries Improve Business Environment 

41.  The Un-Enforceability of the Nigerian FRC’s Code of Corporate Governance

 

 Proshare Nigeria Pvt. Ltd.



Proshare Nigeria Pvt. Ltd.

READ MORE:
Related News
SCROLL TO TOP