FIRS Issues Information Circulars on Provisions of Tax Laws Amended by the Finance Act, 2019


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The Federal Inland Revenue Service (FIRS or "the Service") has issued the following Information Circulars numbered 2020/02 - 08 ("the Circulars") titled:


1. Clarification on the Implementation of the Value Added Tax (VAT) Provisions of the Finance Act, 2019 ("VAT Circular");


2. Circular on Tax Implications of the Operation of Regulated Securities Lending Transaction (SEC Lending) in Nigeria ("SEC Lending Circular");


3. Clarifications on Sundry provisions of the Finance Act 2019 as it relates to Companies Income Tax Act ("CITA Circular");


4. Clarifications on the Provisions of the Stamp Duties Act ("Stamp Duties Circular");


5. Clarification on Commencement and Cessation Rules, and Business Reorganisation: - Sections 29 of CITA, 32 of CGTA and 42 of VATA (as amended by the Finance Act, 2019) ("Business Reorganisation Circular");


6. Circular on Tax Implications of Operation of Real Estate Investment Companies ("REIC") in Nigeria ("REIC Circular"): and


7. Clarification on the Amendment to Section 16 of Companies Income Tax Act (CITA) in Relation to Taxation of Insurance Companies ("Insurance Taxation Circular")


The Circulars are aimed at providing guidance to stakeholders on the interpretation of the amendments to extant tax laws by the Finance Act 2019, and practical issues associated with their implementation. The

Circulars supersede any previously issued circular, notice or publication by the FIRS, which is inconsistent with the Circulars to the extent of its inconsistency.


The outlines of the provisions of each Circular are as follows:


1. The VAT Circular No. 2020/02:

  • Definition of Goods and Services
  • Rate of tax
  • Transition issues
  • Registration and Deregistration
  • Registration by Non-residents
  • Self-account provision
  • Introduction of VAT threshold
  • Determination of N25 million turnover threshold
  • Business sold or transferred
  • Exported services
  • Penalty regime


2. The SEC Lending Circular No. 2020/03:

  • Relevant regulatory provisions
  • Nature of regulated securities lending transactions
  • Definition of key terms
  • Incomes under a SEC Lending
  • Taxation of income on SEC Lending under CITA
  • Income earned by an individual under a SEC Lending
  • Application of Stamp Duties Act to SEC Lending

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3. The CITA Circular No. 2020/04:

  • Section 19 of CITA on payment of dividend by a Nigerian company
  • Exemption of small companies from income tax: withholding tax obligations, tertiary education tax obligation, treatment of capital allowances and anti-abuse measures
  • Profits on goods exported
  • Tax deductible interest expense
  • Section 27 of CITA - expenses incurred in earning tax-exempt income
  • Tax or penalty borne on behalf of another person
  • Section 29 of CITA - filing of tax returns
  • Minimum tax - definition of "gross turnover"
  • Gas utilization (downstream operations)
  • Rate of tax
  • Section 77 of CITA - removal of provisional tax, and filing and payment of tax
  • Withholding tax rate for construction contracts
  • Relief for foreign loans


4. The Stamp Duties Circular No. 2020/05:

  • Applicability of stamp duties to electronic documents
  • Instruments and receipts liable to stamp duties
  • Mode of denoting stamp duties
  • Electronic documents received in Nigeria
  • Authority to collect stamp duties
  • Stamp duties on bank deposits or transfers above N10,000
  • Stamp duties on loans and credit facilities
  • Stamp duties on contract notes
  • Stamp duties on contracts
  • Transition issues


5. The Business Reorganisation Circular No. 2020/06:

  • Basis of assessment for the first year to third years of assessment
  • Basis of assessment during cessation of business
  • Business reorganisation and restructuring


6. The REIC Circular No. 2020/07:

  • Regulatory overview of REITs
  • Definitions of Real Estate Investment Schemes (REIS) and "real estate"
  • Nature of REIS
  • Taxation of the income derived by REICs


7. The Insurance Taxation Circular No. 2020/08:

  • Non-life insurance companies: determination of reserve for unexpired risk, estimate of outstanding claims and outgoings, minimum tax, gross premium, and template for computing companies income tax (CIT) liability.
  • Life insurance companies: definition of gross income and template for computing CIT liability.

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