KPMG is pleased to announce the publication of its Nigeria Fiscal Guide for 2021.
The publication provides an overview of the applicable taxes, regulations and available investment incentives to companies and individuals in Nigeria; as well as a snapshot of the country's macro-economic position as at March 2021.
We hope that you find the insights in the Publication useful.
Companies (other than those engaged in petroleum operations) are subject to companies' income tax (CIT) on their taxable profits. Nigerian companies are assessed to tax on their worldwide income, whilst non-resident companies (NRCs) are subject to tax only on profits accrued in or derived from Nigeria, to the extent that the profits are not attributable to operations outside Nigeria. For NRCs whose activities constitute a Significant Economic Presence (SEP) in Nigeria, CIT is charged on only the portion of the profit attributable to such activities in Nigeria. Every NRC carrying on trade or business in the country or whose activity constitutes SEP is required to prepare audited financial statements and file CIT returns within 6 months from the end of their financial year. However, withholding tax (WHT) is the final tax for such a NRC that derives profit from the provision of technical, management, consultancy, or professional services to persons resident in Nigeria, provided it does not have a fixed base, or engages in any other trade or business, in the country as defined by the CIT Act.
Further, Nigerian companies and NRCs are liable to minimum tax where:
unless they meet any of the criteria for exemption. Finance Act, 2019 amended the base and rate of minimum tax to 0.5% of a company's turnover less franked investment income.
To alleviate the impact of COVID-19 pandemic on business, the Federal Government has through Finance Act, 2020 temporarily reduced the minimum tax rate by 50% to 0.25%. This is applicable for YOAs falling due between 1 January 2020 and 31 December 2021.
Individuals are subject to tax under the Personal Income Tax (PIT) Act (as amended). Resident individuals are subject to tax on all their personal income, including income derived from outside Nigeria when it is brought into the country (except those specifically exempted from tax). The PIT is collected by the government of the State in which the individual resides, except certain categories of individuals whose taxes are payable to the Federal Government.
Non-resident individuals (NRIs) are liable to tax on their Nigerian-sourced income. The income of an NRI from an employment, profession, vocation or business in Nigeria is generally taxed in the same manner as that of a resident, irrespective of where the income is paid. However, investment income derived from Nigeria by a person resident outside the country is only liable to WHT as the final tax. Equally, by Finance Act, 2020, an NRI with SEP who derives income from technical, management, consultancy or professional services provided to a person resident in Nigeria is only liable to WHT as the final tax on such income.
Download Here - Nigeria Fiscal Guide 2021
For further enquiries, please contact the author, Wole Obayomi via email@example.com