Under the Finance Act 2021, there are new rules pertaining to how non-residents are subjected to CIT and VAT.
Under the CIT amendment – Non-resident companies liable to tax on profits arising from providing digital goods or services to Nigerian customers under the Significant Economic Presence (SEP) Rule may be assessed on fair and reasonable percentage of their turnover (6% effective tax rate on turnover) in the event that there is no assessable profit, the assessable profit is less than what is to be expected from that type of trade or business, or the assessable profit cannot be ascertained.
Under the VAT amendment – Non-resident Suppliers of taxable goods or services to Nigeria (more especially, digital goods), or any other person appointed by the Service to collect tax under the VAT Act, have statutory obligation to collect the VAT and remit same to the Service. This eases some tax compliance burden from the Nigerian buyers of these taxable goods and services. In this regard, notice that many digital platforms now include VAT on their bills to Nigerian users of their digital services.
For further enquiries, discussion, advisory or help around complying with these new laws, please send us an email via clients@vi-m.com. You will be able to access all our explanatory write-ups on each of the major changes to the laws, brought about by the Finance Act 2021 and the practical ways in which they will affect taxpayers going forward, under our website group link – https://www.vi-m/category/Finance-Act-2021.