Vi-M Professional Solutions

Category: News

  • RECENT DEVELOPMENTS ON THE VOLUNTARY PENSION CONTRIBUTION SCHEME

    On 21 August 2017, the Joint Tax Board (JTB) and the Lagos State Internal Revenue Service (LIRS) issued separate public notices, cautioning the general public (particularly employers and employees), to desist from exploitation of the Voluntary Pension Contribution Scheme for tax avoidance purposes. That is, the practice of contributing greater parts of employees’ remunerations (over and above the statutory 8% of monthly emoluments) voluntarily, into their Retirement Savings Accounts (RSA) for the purpose of reducing the taxes payable on such remunerations, based on the legal tax exemptions granted on the pension contributions.

    You may access the public notices of the JTBand LIRShere.

    In these public notices, both tax bodies made references to certain provisions of the Personal Income Tax Act (PITA) and the Pension Reform Act, 2014, [“the PRA” or “the Act” (which guides the administration of the Pension Scheme (“the Scheme”) in Nigeria)] as the legal bases for the penal actions they (and other personal income tax authorities nationwide) intend to take against ‘culprits’ in order to address this abuse of the Scheme.

    The legal references made by the JTB and LIRS respectively in their public notices, as bases for penalizing offenders and recouping the tax leakages, are however greatly weakened by certain provisions of the PRA, making it almost impossible for the tax authorities to win any legal case against perceived offenders. Some of these legal references and the counteracting provisions of the PRA are highlighted below:

    1. References to Section 17, and paragraph 8 of the fourth schedule to PITA

    Section 10(1) of the PRA states that “Notwithstanding the provisions of any other law,contributions to the scheme under the Act, shall form part of the tax deductible expenses in the computation of tax payable by an employer or employee under the relevant income tax law”. The provisions of section 17 and paragraph 8 of the fourth schedule to PITA can be categorized as ‘any other law’ and so are now being expressly overridden by this provision of the PRA. 

    • Reference to Section 16 of the PRA on restrictions as to time of withdrawal from the Scheme

    Section 16 of the PRA on restrictions to the allowable times or periods of making cash withdrawals from the Scheme is also countered by the provision of Section 10 (4) of the PRA, which pre-allows for withdrawal of the voluntary pension contributions even within 5 years of such contribution. Our interpretation, and those of the Pension Fund Administrators (PFAs) whom we have contacted on this subject is that the restrictions of section 16 of the PRA on allowable periods of withdrawals from the Scheme apply onlyto the statutory or obligatory portion of the contributions and not to the voluntary part.

    • Reference to taxability of the voluntary contributions if cash withdrawals are made earlier than the prescribed timelines

    Contrary to popular views that voluntary pension contributions are only exempt from tax if withdrawn after 5 years of contribution, section 10(4) actually onlymakes reference to ‘incomes’ earned (returns or interest) on the voluntary contributions. Therefore, onlythe investment income portion of the voluntary contribution is taxable even if the contributions are withdrawn before 5 years from the date of contributions.

    • Reference to the Labour Act

    The reference to the provisions of the Labour Act by the JTB, as to the limitations on allowable maximum monthly deductions from wages does not hold water as the Labour Act only covers employees engaged under a contract of manual labour or clerical work in the private and public sector. It does not cover all those employees exercising administrative, executive, technical or professional functions as public officers or otherwise.

    • Indication by LIRS that employers would be assessed to additional tax, interest and penalty on taxes resulting from abuse of the voluntary contributions

    Further to the legal provision that withdrawals from the voluntary contributions (not being incomes accruing on the fund) are not taxable even if withdrawn within 5 years, employers also have no part whatsoever in the process of withdrawal of funds from the voluntary contributions. Individual contributors to the Scheme only need to apply to their PFAs (who in turn get approvals from the National Pension Commission) to be paid their voluntary contributions. Since the employers are not involved in the voluntary contribution withdrawal process, no penalty or additional tax burden should be levied on them in this regard. 

    The Federal Government, in its bid to encourage unrestricted contributions into the national pension fund, issued the PRA in 2014 and made certain provisions in the Act, which may unknowingly have given room and even legal backing to uncontrolled tax avoidance practices through the Scheme. 

    Since the curtailment of tax leakages/ enhancement of tax revenue is currently paramount in government’s economic agenda, serious consideration should be given to possible amendment of certain provisions of the PRA, in order to summarily address the obvious loopholes. This, in our opinion, would be a more thorough and effective approach than the issuance of public notices. 

    The PFAs whom we contacted on the subject are also awaiting further directives and practical guidance from the National Pension Commission towards addressing the issue of abuse of the voluntary pension contribution scheme, as it is not clear to them how government intends to recoup the additional taxes (if any) at the point of withdrawal of the contributions. 

    One new noteworthy compliance requirement as contained in LIRS’ public notice however, which bears the potential of exposing abusers of the Scheme, is that on an annual basis, individuals claiming tax relief on their voluntary pension contributions, must submit alongside their income tax returns, a copy of their Retirement Savings Accounts (RSA) statements for the relevant tax year and any other period requested by the LIRS.  

  • VAIDS: DEFAULTING TAX PAYERS TO RECEIVE 9 MONTHS GRACE

    You would recall our newsletter of 31 March 2017, sensitizing you on the topic of Voluntary Assets and Income Declaration Scheme (VAIDS), as an outcome of the National Executive Council (NEC) meeting held on March 16, 2017.

    The Scheme has now been launched at Abuja yesterday, 29 June 2017, with the signing of an executive order on its implementation by the Acting President, Yemi Osinbajo.

    Through VAIDS, the federal government is asking individuals, high net worth individuals and companies to willingly declare to the tax authority, their ownership rights to assets and incomes earned from all sources and willingly pay the taxes due on such incomes and assets.

    The Scheme will embrace all federal and state taxes such as Companies Income Tax, Personal Income Tax, Petroleum Profits Tax, Capital Gains Tax, Stamp Duties, Tertiary Education Tax, Technology Tax etc. and is to be implemented across the thirty-six (36) states of the federation and the Federal Capital Territory (FCT), Abuja.

    All taxpayers who are willing to key into the Scheme have therefore been given a nine months’ grace period to 31 March 2018 to come forward and declare/ settle unpaid taxes.

    Taxpayers who make full and honest declarations within the grace period will be granted waiver of interest and penalty, immunity from prosecution, confidentiality, exemption from tax audits for the periods covered and flexible payment of tax due.

    The Acting President yesterday, urged defaulters to take advantage of the grace period to avoid facing criminal investigation and subsequent prosecution once the grace period is over.

    Also, as part of the federal government’s policy to create awareness about tax issues, the Acting President has now declared every Thursday as national “Tax Thursday” to sensitize and educate Nigerians on the need to perform their civic responsibility. To this effect, the federal government is set to recruit and train about 7,500 community tax liaison officers spread across all local governments and communities in Nigeria to sensitize professionals and taxpayers in the country. Other ‘Tax Thursday’ sensitization programmes would also be unveiled in due course.

    We believe that this is another big step by the Federal Government to provide a soft-landing for many defaulting taxpayers and promote voluntary tax compliance. Recall the 45-day tax waiver window which was also opened for tax defaulters last year. We therefore urge every affected taxpayer to come forward and take maximum advantage of this 9 months’ grace period.

    We, Vi-M Professional Solutions, are well positioned to assist you determine your outstanding tax liabilities (if any) and also provide advisory on practical tax planning measures that you as an individual or company could adopt, as well as available tax incentives for your business/ industry.

    For more information and assistance on this, urgently contact us at Vi-M via clients@vi-m.com or call 08075203657/ 08033127498 and we will be available to meet with you at short notice.

  • INTRODUCING e-SERVICES FROM THE FEDERAL INLAND REVENUE SERVICE (FIRS)

    1. e-Registration

    To do business online with the FIRS, register and be authenticated at www.firs.gov.ngand follow these easy steps:

    • Log in and proceed to the e-Services tab
    • Click on the log in and register tab and input your Tax Identification Number (TIN) or RC Number
    • Choose a username and password upon successful registration
    • Click on Register
    • A security PINwill be sent to your email for authentication to complete the process

    For taxpayers registered with CAC but who have no TIN:

    • Log on to https://apps.firs.gov.ng/tinverification/
    • Enter the CAC registration number i.e. your RC or BN number
    • Enter the CAPTCHA image that will be displayed
    • If your search is successful, you can input your email address and click on the ‘send to my mail’ button to have the details sent to your mail
    • Also check your spam folder if you do not find the mail in your inbox

    For new Business Incorporation:

    • Go to www.cac.gov.ngand follow the end to end process, which includes payment of your stamp duties to complete your incorporation process.
    • e-Stamp Duty

    Stamp duty is a tax levied on documents such as receipts, land transactions and other legal documents. In the past, it required a physical stamp but with the new e-Stamp Duty from the FIRS, stamping can be done from the comfort of your home or office. 

    1. For Dutiable Instruments:
    2. Log on to www.firs.gov.ng
    3. Click on the e-services
    4. Click on e-stamp duty
    5. Log in or sign up
    6. Obtain your credentials (username, password) through your email
    7. Choose a username and password upon successful registration
    8. Log in and select relevant stamp duty instrument
    9. Fill in the form and pay online through the integrated payment gateway
    10. A link to download your e-stamp duty certificate will be automatically sent to your email
    • For New Business Incorporation
    • Go to www.cac.gov.ngand follow the end to end process which includes payment of your stamp duties to complete your registration process.
    • e-TaxPayment

    Electronic Tax payment allows you to pay your taxes from the comfort of your home or office on either of the under listed platforms.

    1. e-TaxPay
    2. log on to the internet banking platform of your bank
    3. Click on NIBSS e-BillsPay
    4. Click on the e-TaxPaytab or type Federal Inland Revenue Service in the search bar
    5. Input your Tax Identification Number (TIN)then verify and confirm your TIN details before selecting the type of tax you are paying
    6. Enter the amount, confirm all details and click: Continue to Pay
    7. e-Acknowledgement is automatically sent to your email
    8. Your FIRS official receipt is sent to your email 24hours after receipt of payment
    9. Click on the indicated link to download and print your receipt
    • Remita
    • Go to www.firs.gov.ng
    • Click on e-services.
    • Click on e-payment.
    • Click on Remita.
    • Select tax type.
    • Enter your TIN, payment amount, tax year, taxpayer’s full name, email address and phone number
    • Enter the CAPTCHAimage.
    • Click on proceed to payment
    • e-acknowledgement is automatically sent to your email 24hours after receipt of payment.
    • Click on the indicated link to download and print your receipt.
    • Interswitch
    • Go to www.quickteller.com
    • Log in (Existing quickteller user) or sign up (new users).
    • Type Federal Inland Revenue Service or FIRS in the search bar.
    • Select tax type.
    • Enter your TIN, payment amount, tax year, taxpayer’s full name, email address and phone numbers.
    • Enter the CAPTCHAimage.
    • Click on proceed to payment.
    • e-Ticket is automatically sent to your email 24hours after receipt of payment.
    • Click on the indicated link to download and print your receipt.
    • e-Receipt

    When you pay your tax using FIRS platform, a link to download your receipt is sent automatically to your email 24 hours after receipt of the payment.

    Click on the link to download and print your receipt

    e-Receipt Verification

    • Go to www.firs.gov.ng
    • Click on e-Services.
    • Click on e-Receipt to verify the authenticity of your receipt.
    • Click on Verify e-Receipt and enter the e-Receipt number and your TIN.
    • Or scan the QR bar on the top right hand corner of the e-Receipt with your QR reader which is a functionality that be downloaded free on the e-Receipt platform or on the app store for iOS (Apple products) and Play Store on Android phones.
    • Now you can receive and verify your e-Payment receipts anytime and anywhere in the world through your email address.
    • You can also confirm if your deducted Withholding Tax (WHT) or VAT payments has been remitted to government anytime and anywhere in the world.
    • Your WHT deduction or VAT payment must be remitted once a month before the 22ndday of the month.

    5.       e-Filing

    The Federal Inland Revenue Service (FIRS) has automated its tax administration processes through the Integrated Tax Administration System (ITAS)

    To file online:

    • Go to www.firs.gov.ng
    • Click on e-Services.
    • Click on e-Filing.
    • Click on download e-Filing access form.
    • Complete the form.
    • Ensure that it is duly signed by the tax payer and/or authorised officer of the tax payer.
    • Select your tax office, scan and email the completed form to your Tax Office. 
    • Check your email for your user ID and Password.
    • Log into ITAS e-Filing portal with your ID and Password.
    • Upload your return.
    • Click Submit.
    • Document Number will be provided automatically.
    • Click on payment.

    *Document Number is a remittance form number, which is used for raising assessment and payment of taxes on the ITAS platform. Document Number is unique to taxpayers, tax type, tax period and tax office*

    e-FILING CAN BE USED TO FILE RETURNS FOR ALL TAXES

    6.          e-TCC

    Taxpayers can now request for their TCC from the comfort of their home or office after fulfilling their civic obligation, with the introduction of FIRS e-TCC.

    • Go to www.firs.gov.ng
    • Click on e-Services.
    • Click on e-TCC.
    • Register on the FIRS e-Services platforms.
    • Obtain your credentials through your email.
    • Choose a username and password upon successful registration.
    • Login and request for your e-TCC.
    • An acknowledgment will be sent to your email that your TCC is being processed.
    • A link to download your e-TCC will be automatically sent to your email on or before 7 days if you have no outstanding tax liabilities.
    • For taxpayers who require practical help with TCC application/ processing (step-by-step guide with screenshots), please refer to our detailed ebook on ‘How to Get Tax Clearance Certificates in Nigeria’ – a step-by-step, self-help guide for all Nigeria taxpayers.

    e-TCC Verification

    • Go to www.firs.gov.ng
    • Click on e-Services.
    • Click on e-TCC to verify the authenticity of your TCC.
    • Click on Verify e-TCC.
    • Enter the e-TCC Number and your TIN or scan the QR bar on the top right hand corner of the e-TCC with your QR reader, which is a functionality that can be downloaded free on the e-TCC platform or on the app store for iOS (Apple products) and Play Store on Android phones.

  • FG to Increase Interest Charge on Unpaid Taxes by 5% Above the CBN’s Monetary Policy Rate

    As part of measures to sanction tax defaulters and enhance voluntary/ timely compliance to taxes, the Federal Government, on 22 May 2017, announced it would from July 1, 2017, impose additional 5 per cent interest charge above the monetary policy rate of 14% (making a total of 19%) on all firms that fail to pay their taxes as and when due in 2017.

    According to the Minister of Finance, Mrs. Kemi Adeosun, who announced the new interest rate spread on unpaid taxes for the year 2017, this revised interest rate was approved by her, based on the provisions of Section 32(1b) of the Federal Inland Revenue Service (Establishment) Act 2007 that empowers her to do so. She explained that the review of interest rates on unpaid taxes is one of the necessary measures adopted by the Federal Government to enhance tax compliance, minimise tax evasion and deter late payments.

    She had emphasised that with a tax to GDP ratio of only 6 per cent, one of the lowest levels in the world, the country has had to intensify effort at tax collection in order to build a sustainable revenue base that will deliver inclusive growth. She stated that the focus of the Federal Government in 2017 is to improve tax revenue through ensuring voluntary and timely compliance with the tax laws and ensuring that taxpayers understand that there are financial consequences for late payments of taxes.

    The Federal Inland Revenue Service (FIRS) has accordingly been directed to commence the implementation of the new interest rate on all unpaid taxes from July 1, 2017.

    Taxpayers should recall that there is a difference between payment of tax and filing of tax returns. Filing of tax returns involves submission of requisite documents on or before certain specified due dates and these documents must include evidence of payment of such taxes being filed. Payment of tax on the other hand, involves remittance of funds into the appropriate tax accounts.

    Interest charges (that is, the proposed 19%) apply only to defaults in tax ‘payments’. For default or delay in tax filing, what applies is usually ‘penalty’ and not ‘interest’.

  • Voluntary Asset and Income Declaration Scheme (VAIDS)

    As an outcome of the National Executive Council (NEC) meeting held on 16 March, 2017, the Federal Government is set to implement what it calls, Voluntary Asset and Income Declaration Scheme (VAIDS), to mitigate the erosion of Nigeria’s tax base through undisclosed incomes. This VAIDS is also designed to discourage tax evasion among Nigerians, thereby generating more revenue for the government.

    Generally, the scheme connotes “willingly making known to a public authority, one’s ownership rights to assets and incomes earned from all sources’’. This will ensure that the claims due to taxpayers on such assets are accurately provided for and that no taxable income is excluded from the tax net.

    The Scheme is expected to become operational on 1 May, 2017, and run for up to six months. As proposed by the Government, it will embrace all federal and state taxes such as Companies Income Tax, Personal Income Tax, Petroleum Profits Tax, Capital Gains Tax, Stamp Duties, Tertiary Education Tax and Technology Tax etc.

    At the press briefing after the NEC meeting, the Federal Inland Revenue Service (FIRS) Chairman, Babatunde Fowler, noted that only 14 million Nigerians pay tax out of a possible 40 million, while only 214 individuals pay N20 million or more as tax annually. He also stated that the scheme is targeted at increasing annual tax contribution to Gross Domestic Product (GDP) to 15% by 2020 from its present level of just about 6%, whilst generating a conservative estimated revenue of USD 1 billion.

    Under the Scheme, incentives will be put in place to encourage early participation and taxpayers will be allowed up to three years to settle their liabilities. For its successful implementation, a Memorandum of Understanding will be gazetted and signed by the Federal Government with each State Government.

    Truth be told, we do not foresee a situation where the average Nigerian taxpayer would willingly want to declare all his or her ownership rights to assets and incomes earned from all sources.

    From the tax payment statistics announced by the FIRS above, one can easily infer that only about 214 Nigerians disclose total incomes of up to N100 million and above in a year, albeit it is common knowledge that very many high net worth individuals earn far more than this amount each year.

    Our hope is that the government will put effective processes and the right amount of incentives in place, in order to achieve the expected results from this scheme.

  • CBN Introduces Charges on Cash Deposits/Withdrawals

    The Central Bank of Nigeria on 21st February, 2017, through a circular to all Deposit Money Banks (DMBs) signed by the Director of Banking and Payments System Department, Mr. Dipo Fatokun, described the modalities for implementation of the cash-less policy to the remaining 30 states of the federation, and the application of charges on cash deposits and withdrawal above certain allowable limits. The Apex bank said this was in line with the decisions made during the 493rd meeting of the Bankers’ Committee on 8th February, 2017.

    The decisions taken at the meeting as released by CBN were as follows:

    Charges on deposit be re-introduced.

    Charges on deposits and withdrawals were reviewed and the new rates indicated as follows;

    For individuals:

    Amounts less than ₦500,000; no charges on deposits and withdrawals

    From ₦500,000 to ₦1,000,000; 1.5% on deposits and 2% on withdrawals.

    Above ₦1,000,000 to ₦5,000,000; 2% on deposits and 3% on withdrawals.

    Above ₦5,000,000; 3% on deposits and 7.5% on withdrawals.

    For corporate:

    Amounts less than ₦3,000,000; no charges on deposits and withdrawals.

    From ₦3,000,000 to ₦10,000,000; 2% on deposits and 5% on withdrawals.

    Above ₦10,000,000 to ₦40,000,000; 3% on deposits and 7.5% on withdrawals.

    Above ₦40,000,000; 5% on deposits and 10% on withdrawals.

    The new charges would take effect from 1<sup>st</sup> April 2017, in the existing cash-less states (Lagos, Ogun, Kano, Abia, Anambra, Rivers and the FCT).

    The policy shall be implemented with the charges taking effect on 1<sup>st</sup> May 2017 in the following states: Bauchi, Bayelsa, Delta, Enugu, Gombe, Imo, Kaduna, Ondo, Osun and Plateau.

    The policy shall be implemented with the charges taking effect on 1<sup>st</sup> August 2017 in the following states: Edo, Katsina, Jigawa, Niger, Oyo, Adamawa, Akwa-Ibom, Ebonyi, Taraba and Nasarawa.

    The policy shall be implemented with the charges taking effect on 1<sup>st</sup> October 2017 in the following states: Borno, Benue, Ekiti, Cross-River, Kebbi, Kogi, Kwara, Yobe, Sokoto and Zamfara.

    The income generated from the processing fees charged above the allowable cash transaction limits shall be shared between the CBN and the banks in the ratio of 40:60.

    Existing exemptions remain sustained for:

    Revenue generating accounts of the Federal, State and Local Governments (lodgments only)

    Embassies, Diplomatic Missions, Multilateral and Aid Donor Agencies in Nigeria are also exempted from all processing fees relating to the cash-less policy implementation.

    The CBN also urged the Banks to enlighten their customers on the cash-less policy, train their staffs on the cash-less policy so as to handle enquires and customer complaints, engage in media communication to complement CBN’s media campaign and engage key bank’s customers and other stakeholders.

    From the above actions by the Apex bank, the CBN has once more resurrected its fight towards a cash-less economy. Though it can be said that it is a way of generating revenue for the government during this period of economic recession.

  • The Federal Government Introduces A 60-Day Action Plan for Ease of Doing Business

    The Presidential Enabling Business Environment Council (PEBEC), during its sixth meeting, last week Tuesday, 21 February 2017, unveiled a 60-day national action plan for the ease of doing business in Nigeria. The council revealed that this was done with the intention of aiding businesses across the country and is also expected to improve Nigeria’s ranking in the World Bank’s Doing Business Index 2018.

    During the meeting, the Council approved a national action plan to be implemented across its three priority areas – Entry and Exit of goods; Entry and Exit of people and Government Transparency and Procurement – over the next 60 days to deliver tangible changes for SMEs in Nigeria.

    Acting President Yemi Osinbajo, urged the National Assembly, to come up with an enabling legislation that would facilitate ease of doing business in the country within the timeframe.

    Specifically, PEBEC is to work with the legislature to pass vital bills like the National Collateral Registry Bill and the Credit Bureau Services Bill to allow the SMEs access credit with ease. Also, the Government is understudying the Georgian Government to tap from its experience with a view to turning the business climate around nationwide.

    This initiative is to be implemented by the Enabling Business Environment Secretariat (EBES) which became operational in October 2016 with Dr. Jumoke Oduwole, the Senior Special Assistant to the President on Industry, Trade and Investment (OVP) as its coordinator.

    A statement issued at the end of the meeting indicated that one of the reforms to be implemented to ease the process of starting a business is the upgrade of the CAC online portal to ensure document upload capabilities that will make it possible for new businesses to be registered online from start to finish without having to visit the CAC office.

    It also disclosed that work is ongoing to streamline the number of agencies operating at the nation’s ports to only six. Council also listened to updates on the proposed Single Window Initiative at the ports which is expected to become operational by Q4 2017.

    This move by the Federal Government has been lauded by many stakeholders as a step in the right direction though some critics have argued that the duration is too short and could have been extended to 6 months to enable wider dissemination of information and a longer course of action. We keep our fingers crossed as we wait to see what follows in the coming days.

  • CBN Amends its Foreign Exchange Policy

    The Central Bank of Nigeria (CBN), on Monday, 20 February 2017, in apparent response to the scarcity of foreign exchange in the country, released some amendments to the current forex policy.

    In a statement on Monday by its Acting Director of Corporate Communications, Isaac Okorafor, the CBN listed major areas it intends to make changes. The statement by Okorafor reads in full:

    New Policy Actions in the Foreign Exchange Market

    “In continuation of efforts to increase the availability of Foreign Exchange in order to ease the difficulties encountered by Nigerians in obtaining funds for Foreign Exchange transactions, the Central Bank of Nigeria (CBN) is providing direct additional funding to banks to meet the needs of Nigerians for Personal and Business Travel, Medical needs, and School fees, effective immediately.

    The CBN expects such retail transactions to be settled at a rate not exceeding 20 percent above the interbank market rate.

    Travel Allowances

    Having cleared the historic backlog of matured letters of credit at the inception of the current flexible exchange rate system, the CBN would immediately begin to provide foreign exchange to all commercial banks to meet the needs of both personal travel allowances (PTA) and business travel allowances (BTA) for onward sale to customers. All banks would receive amounts commensurate with their demand per week, which would be sold to customers who meet usual basic documentary requirements.

    School and Medical Fees

    Similarly, the CBN would meet the needs of parents, guardians and sponsors who are seeking to make payments of school and educational fees for their children and wards. Such payments must be made by commercial banks directly to the institution specified by the customer.

    The CBN would ensure that this process is as smooth as possible and that as many customers as possible get the foreign exchange they genuinely demand.

    This would also apply to customers seeking to make payments, or purchase foreign exchange, for medical bills and paid directly to hospitals.

    The supply of FX to retail end-users (PTA, BTA, School fees, medical bills, etc.) would be sustained by the CBN.

    Forward Sales Tenor

    In order to further increase the availability of foreign exchange to all end-users, the CBN has decided to significantly reduce the tenor of its forward sales from the current maximum cycle of 180 days, to no more than 60 days from the date of transaction.

    FX Sales at Major Airports

    In order to further ease the burden of travellers and ensure that transactions are settled at much more competitive exchange rates, the CBN hereby directs all banks to open FX retail outlets at major airports as soon as logistics permit.

    Increase Efficiency of FX Market

    In order to maintain confidence in the FX market, the CBN will immediately take the following steps:

    Begin implementing its articulated program to clear all the unfilled orders in the interbank FX market;

    Given our plan to meet all unfilled orders, and while provision of FX to the manufacturing sector would remain the CBN’s strong priority, we will no longer impose allocation/utilization rules on commercial banks;

    Implement an effective intervention programme to support the inter-bank market to ensure adequate liquidity necessary to deliver an efficient FX market;

    Advise FMDQ to activate its FX Order-Book systems as soon as possible and also accelerate the on-boarding of FX clients on the FX Relationship Systems to ensure total transparency of the FX market.

    Given the CBN’s objective to continuously and vigorously pursue a transparent, liquid, and efficient FX Market, the Bank reiterates it would neither tolerate unscrupulous actions nor hesitate to bring serious sanctions on offenders, be they banks or their staff.

    The Bank therefore encourages market participants to assist in ensuring that these new measures engender the preservation of our external reserves, stability of our financial system, and growth of our economy to the benefit of all Nigerians”.

    Following these changes, the Naira has gone from an all-time high of N522 to a dollar (as of 20 February 2017) to ₦450 to a dollar (as of yesterday, 27 February 2017) in the parallel market.

    Analysts have predicted the naira rate going as low as ₦400 to the dollar this week, following a further injection of $180,000,000 by the CBN, this week, into the Forex Market.

    This intervention of the CBN in the Forex market has been lauded by many based on the recent performance of the naira to the dollar. It is our hope that the CBN would sustain this supply of foreign exchange into the market, while other more permanent avenues for generating adequate supply of foreign exchange in the country, and strengthening of the naira, are explored.

  • Change in Definition of ‘Payroll’ for NSITF Contribution Purposes 

    The Employees’ Compensation Act of 2010 (‘the ECA’ or ‘the Act’), requires every employer to make a monthly contribution of 1% of ‘payroll’ cost to Nigeria Social Insurance Trust Fund (NSITF).

    Since the ECA has not provided a clear definition of ‘payroll’, the stipulated 1% had hitherto been applied on total emoluments.

    However, following a recent interactive session on <em>‘the Implementation and Administration of the ECA 2010’</em>, between NSITF and Nigeria Employers’ Consultative Association (NECA), both bodies have signed a Memorandum, clarifying amongst other things, the definition of ‘payroll’ for ECA levy computation purposes. This Memorandum was effective, 01 January 2017.

    Both bodies have now agreed to adopt the definition of ‘Remuneration’ as provided in the Act, as the new definition of ‘payroll’, with the exception of the following:

    Pension contributions

    Bonuses – performance related payments (whether monthly, quarterly or yearly)

    Overtime payments

    Irregular one-off payments (e.g. driver’s allowances, medicals, 13<sup>th</sup> month salary, etc.)

    The Act defines ‘Remuneration’ as basic wages, salaries or earnings designated or calculated, capable of being expressed in terms of money and fixed by mutual agreement, or by law, which are payable by an employer to an employee, for work done or to be done or services rendered or to be rendered; and allowances which include rental, transport, meals and utility or other allowances as may be determined by the Board, from time to time.

    Our interpretation of the above is that the ECA levy is still based on total employment benefits (including benefits-in-kind), but with the exception of the afore-listed items.

  • Transfer pricing toolkit for developing countries jointly released by IMF, OECD, UN and World Bank Group

    The Platform for Collaboration on Tax – a joint initiative of the International Monetary Fund (IMF), Organisation for Economic Co-operation and Development (OECD), United Nations (UN) and World Bank Group (WBG) – on 24 January 2017, released a draft toolkit addressing ways that emerging economies can overcome lack of comparable data or market prices for goods and services in the area of transfer pricing. The ‘Platform’ has asked for comments and input on the draft by 21 February 2017 from interested stakeholders to finalise the toolkit. Responses can be sent in through the Secretariats of the four organisations involved.

    The toolkit is a very insightful document which simplifies and addresses some of the challenges associated accessing comparables data (for benchmark studies). It also focuses on how to make the best use of available data and on the importance of the choice of the most appropriate transfer pricing method.

    Further, it describes issues and possible solutions when adequate data on transactions between independent parties are not available, including the potential for developing safe harbours or prescriptive approaches. Finally, due to the complexity of the topic, the toolkit sets out areas where further work is planned, and summarises a number of conclusions.

    https://www.vi-m.com/wp-content/uploads/2017/02/Toolkit-for-TP-in-developing-countries-discussion-draft-24-January-2017.pdf You can view/ download the TOOLKIT here.