FIRS Issues Public Notice, Demanding the Submission of Certificate of Acceptance of Fixed Assets (CAFA) by Companies

In its Public Notice of 9 May 2022 (view here), the Federal Inland Revenue Service (FIRS), is demanding the following of Nigerian Companies:

  1. All companies that enjoyed or claimed Capital Allowances on Qualifying Capital Expenditure (QCE) (of N 500,000 and above), between 2016 and 2021 years of assessment, are to submit, on or before 31 October 2022, the Certificate(s) of Acceptance of Fixed Assets (issued by the Industrial Inspectorate Division of the Federal Ministry of Industries, Trade and Investment), to the tax office where the company’s tax file is domiciled. Failure to do so, the FIRS may withdraw the capital allowances enjoyed by the company, for the above-mentioned tax years, and levy additional income taxes as a consequence of withdrawal of the tax allowance.
  • Henceforth, every company is to submit its Certificate(s) of Acceptance in respect of QCE (of NGN500,000 and above) incurred in each year of assessment.


In simple language, ‘Capital Allowance’ is an allowance or allowable deduction from assessable profits, granted by the Companies’ Income Tax Act (CITA) in lieu of ‘Depreciation of fixed assets’ which is not allowed as deduction from assessable profits while computing companies’ income tax. 

By law, the following conditions must be met by a company before capital allowances can be claimed by the company:

  • The company or taxpayer must own the asset
  • The company must have incurred the qualifying capital expenditure wholly, exclusively, reasonably, and necessarily for the purpose of its trade or business.
  • The asset must be in ‘use’ for the purpose of the trade or business at the end of the financial year/ tax basis period.

Capital Expenditure is termed ‘Qualifying Capital Expenditure’ (QCE) if they meet all the criteria above, for grant of Capital Allowance.

In Practice over the years, the taxpayer is required to present a Certificate of Acceptance of Fixed Assets (CAFA) issued by the Federal Ministry of Industries, Trade, and Investment, in respect of assets acquired for N500,000 and above (in each asset category), to prove that it had indeed incurred the Capital Expenditure for ‘use’ by the business. 

CAFA is not specifically required by the tax laws as a condition for claim of Capital Allowance. In Practice, where Certificate of Acceptance was not available, provision of purchase invoices for the fixed assets had sufficed as proof of acquisition and company’s ownership of the assets.

The FIRS is however, deriving its authority to make this demand for submission of Certificate Acceptance, from Section 5(1) of the Industrial Inspectorate Act, Section 26 of the Federal Inland Revenue Service (Establishment) Act (FIRSEA) and Section 60 of the CITA.

Considering the huge cost and significant time it takes to process Certificate of Acceptance, it is our hope that the FIRS would not enforce this directive, particularly in the area of withdrawing or denying grant of Capital Allowances, because this has no legal basis and would constitute significant additional tax compliance burden on already over-tasked Nigerian companies. 

For more enquiries, or for help with understanding or reviewing your business for the need for Certificate of Acceptance of Fixed Assets (CAFA) or even processing of the CAFA, please contact us via