Unfortunately, we are far behind on tax law reform in nigeria as the last time any business tax legislation was enacted or. Based on international trade convention, every country is allowed to adopt laws, rules and regulations that govern its trade relationships with other countries in a way that enables it achieve the desired strategic objectives. An act to domesticate and enforce in nigeria the avoidance of double taxation between the federal republic of nigeria and the kingdom of spain and for related matters. Aug 23, 2018 the federal government of nigeria fgn concluded the negotiation of double taxation agreements the dtas with the republic of ghana and the republic of cameroon on 26 july 2018 and 3 august 2018, respectively. This publication is a summary of the major tax laws in nigeria, prepared for. Pdf the study examines the appropriateness of multiple taxes in developing nations like nigeria. The purpose of the agreements between the two tax administrations of two countries is to enable the administrations to eliminate double taxation. Nigeria concludes double tax treaties with ghana and cameroon.
Tax policy, tax legislation and tax administration. Nigeria currently has inforce double tax treaties for taxes on income and capital. Desiring to conclude a convention for the avoidance of double taxation and the. The views expressed herein are those of the author and should not be attributed to the imf, its executive board, or its management. Over the years, nigeria has entered into bilateral double taxation agreements henceforth referred to as. Desiring to conclude an agreement or the avoidance of double taxation and the prevention of fiscal evasion with. Abiola sanni, phd, fcti senior lecturer department of commercial and industrial law university of lagos, nigeria 1. Nigeria pursuant to articles 287 and 294 of the convention. Its an easier way for the government to get more people to pay their tax. The administration of tax in nigeria is vested in the various tax authorities depending on the type of. Over the years, nigeria has entered into bilateral double taxation agreements henceforth referred to. Double taxation relief between the federal republic of nigeria and the government of romania order 1997 under section 451 commencement.
This, however, does not create opportunities for non taxation or tax avoidance. Also signed was a protocol for the treaty which agreements contain measures providing beneficial tax rates for dividends, interest, and royalties. Double taxation agreements between nigeria and other countries and provisions of relevant tax laws. Nigeria where there is no relief from double taxation in nigeria, are. Double taxation relief between the federal republic of nigeria and the government of the kingdom of belgium order 1997 under section 451 commencement. Double taxation is an impediment because it devours the main purpose for which an investor is investing which is to maximize profits the problem of double taxation was resolved by the enactment of double taxation treaties. Among the items addressed in nigerias map guidelines pdf 123.
Taxation in nigeria plus history of taxation in nigeria. Application of the income tax treaty measures to address double taxation. In all nigeria treaties, elimination of double taxation is granted by credit method. Nov, 2019 avoidance of double taxation agreement between the federal republic of nigeria and the kingdom of spain domestication and enforcement act, 2017. Based on international trade convention, every country is allowed to adopt laws, rules and regulations that govern its trade relationships with other countries in a way that enables it. Taxpayers also may want to consider the map guidelines in initiating prefiling consultations with the nigeria competent authority when there are unresolved double taxation matters. Nigeria and belgium has a double taxation agreement, with article 23 of the agreement providing for credit method of elimination of double taxation. Avoidance of double taxation and prevention of fiscal evasion with respect to taxes on income and on capital gains. The final section of each country summary sets out the double tax treaty and nontreaty rates of tax withholding relating to the payment of dividends, interest, royalties and other related payments. Pdf multiple tax practices and taxpayers noncompliance. Nigeria agreement between the kingdom of the netherlands and the federal republic of nigeria for the avoidance of double taxation and the prevention of fiscal evasion with respect to. The double taxation agreement entered into force on 27 december 1987. The united kingdom, the netherlands, canada, south africa, china, philippines.
The agreement for the avoidance of double taxation is useful for establishing a single point of taxation, for eliminating the current regime where income derived from one of the two locations was taxed in both jurisdictions. Map guidelines, double taxation disputes kpmg global. Aug 20, 2019 double taxation is a tax principle referring to income taxes paid twice on the same source of income. Apr 29, 2019 double taxation is a term used to describe the way taxes are imposed on corporate shareholders and on corporations. Taxation of nonresident companies in nigeria the significant decline in oil prices, oil theft and the vandalization of oil pipelines have adversely affected the nigerian governments revenue. Among the tax incentives usually utilized in nigeria are capital allowances, capital gains tax reliefs, company income taxes, value added tax, tax holiday and double taxation treaties or agreements olaleye, 2016. Article 24 elimination of double taxation this article discusses the methods of elimination of double taxation. The objective of this study is to investigate the impact of taxation on economic development of nigeria proxy by the gross domestic product gdp. New double tax treaty between singapore and nigeria. Notification of choice of optional provisions pursuant to article 66 of the convention, nigeria hereby chooses to apply article 63. Review of mauritius nigeria double taxation treaty background information in august 2012, representatives of the governments of mauritius and nigeria signed an income tax treaty. Introduction following the emergence of multiplicity of taxes in the nigerian fiscal landscape, 1 the joint tax. Taxation, the world over, has been viewed as a method of mobilizing and sustaining a nations financial resources. Double taxation treaty and foreign direct investment.
Atswa institute of chartered accountants of nigeria. The double taxation relief taxes on income nigeria order 1987. Nigeria currently has dtts with thirteen countries namely. This information is useful for policy makers, implementation and for research purposes. All over the world, residence and source based taxation are two principles which drive the taxation of corporate players in international. Implications of multiple taxation on the economy omesi, israel mba, ph. It can occur when income is taxed at both the corporate level and personal level. Effects of multiple taxation on the performance of small. Double taxation agreements are reproduced under the terms. All you need to know a withholding tax is a system of taxation. Double taxation agreement between china and nigeria. Implications the ratification of the treaty is a positive development between the two countries. This is in addition to other factors such as security, availability and access to power, rule of law etc. The double tax treaty dta between singapore and nigeria applies on all taxes on income or elements of income.
This, however, does not create opportunities for nontaxation or tax. The nigeria tax system, like any tax system, is a tripartite structure which comprises of. Individuals are subject to tax under the personal income tax act as amended. Pdf the nigerian government commitment to diversify its sources of. Meanwhile, it is worthy of note that nigeria s double tax treaties is a far cry from the number which other developed and developing countries have. The objectives of tax treaties include prevention of double taxation. Japan high level tax conference for asian and pacific countries. Again, the issue of whether the tax should be levied on the profits of the company rather than on its turnover is another issue of controversy6.
Double taxation relief between the federal republic of nigeria and the united kingdom of great britain and northern ireland order under section 451 commencement. Even after some tax policies the tax authority has put in place over the few years such as the e payment scheme, tax identification number. Republic of nigeria, desiring to conclude an agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital gains, have agreed as. The federal republic of nigeria for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital the kingdom of spain and the federal republic of nigeria, desiring to conclude an agreement for the avoidance of double taxation and the. Of the republic of ghana for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains the government of the united kingdom of great britain and northern ireland and the government of the republic of ghana. Read an april 2019 report pdf 128 kb prepared by the kpmg member firm in nigeria. Tax treaties and related documents between the uk and nigeria. The double taxation convention entered into force on 10 august 1994 and is effective in. I department of accounting, kogi state university, anyigba, nigeria. In august 2012, representatives of the governments of mauritius and nigeria signed an income tax treaty. The united kingdom, the netherlands, canada, south africa, china, philippines, pakistan, romania, belgium, france, mauritius, south korea and italy. Double taxation occurs when an entity or individual is taxed on the same income by different countries at the same time. Double taxation agreement dta for developing countries kentaro ogata imf. The federal government of nigeria nigeria, on 26 january, 2018, ratified the double tax agreement the treaty between the federal republic of nigeria and the kingdom of spain making it a part of the countrys domestic law.
Double taxation relief between the federal republic of. These include capital gains or income derived from movable or immovable property rent, for example. Improved double tax arrangements in nigeria deloitte nigeria. In nigeria, nobody can dispute the fact that though this taxes are been collected, they are. Effects of multiple taxation on the performance of small and medium scale business enterprises in benue state ocheni, s. The income tax department never asks for your pin numbers, passwords or similar access information for credit cards, banks or other financial accounts through email the income tax department appeals to taxpayers not to respond to such emails and not to share information relating to their credit card, bank and other financial accounts. Formed in 1997, the atmc is the flagship representative body in the global business industry. Pdf the issue of multiple tax practices has always generated and continues to generate controversy among the tiers of government in nigeria. I professor of accounting, department of accounting, kogi state university, anyigba, nigeria. Double tax treaty and nontreaty rates of tax withholding relating to the payment. Companies resident in nigeria are assessable to tax on their worldwide income, whilst nonresident companies are subject to tax on profits accrued in or derived from nigeria, to the extent that the profits are not attributable to operations outside nigeria. To this end, it is imperative that nigeria leverages on its status as the largest economy in africa and. Consequently, the government has implemented several initiatives in this regard. However, given that the laws of the federation of nigeria are compiled in several volumes, the latest comprising of 14 volumes, it follows that a person whose interest traverses more than one tax type at any given time must necessarily consult several volumes simultaneously.
Avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on. Article 4 application of methods for elimination of double taxation notification of existing provisions in listed agreements pursuant to article 44 of the convention, nigeria considers that the following agreements contain a. Its effective in nigeria from 1 january 1988 and in the uk from. Double taxation the chapter contains only 1 article. Taxation is a significant consideration for foreign investors who seek to do business in nigeria. Many of them have covered all its ramifications while some have effectively appraised the problem of tax administration in. Of the federal republic of nigeria for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains the government of the united kingdom of great britain and northern ireland and the government of the federal republic of nigeria.
Double taxation agreements treaties nigeria has a number of tax treaties referred to as double taxation agreements with a number of countries. Tax policy forms the basis for tax laws while tax administration is the implementation of the tax laws. In another way round, nigeria cannot afford to operate contradictory legislation whereby one will create a right and the other one will negate it. Nigerias double tax treaties is a far cry from the number which other developed and developing countries have. Scope of the study tax revenue generated by the federal government of nigeria and tax revenue generated by some selected states were obtained in order to assess the impact of taxation on revenue generation by the federal government of nigeria and by some selected states in nigeria from 20022011. Double taxation agreementstreaties nigeria has a number of tax treaties referred to as double taxation agreements with a number of countries. The double taxation agreements dtas and protocols that are already in force, have been divided into two groups to make navigation easier, i. Government, tax administrators, practitioners and academics alike. Avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains the government of the federal republic of nigeria government of the united kingdom of great britain and northern ireland. The corporation is taxed on its earnings profits, and the shareholders are taxed again on the dividends they receive from those earnings. Taxation and economic growth in nigeria onakoya, adegbemi babatunde1 afintinni, oluwatobi ibukun2 1,2department of economics, banking and finance, babcock university, ilishan remo, nigeria abstract over several decades, taxation has been taken as a veritable medium of engineering the growth or performance of an economy. The above unethical tax practices could be minimized by. Taxation in nigeria and history of taxation in nigeria a tax in nigeria is a compulsory levy imposed by the federal government of nigeria on individuals and corporate entities in respective of return of service expected from the government.
Double taxation is the levying of tax by two or more jurisdictions on the same income in the case of income taxes, asset in the case of capital taxes, or financial transaction in the case of sales taxes. To this end, it is imperative that nigeria leverages on its status as the largest economy in africa and takes advantages of the benefits dtts offer. While the africa tax guide should not to be regarded as offering a complete explanation of the taxation. Compute the tax payable in nigeria by the company for. Most of our members are trust and management companies licensed by the financial services commission fsc. Nigeria ratifies double tax agreement with spain ey global. Establishment of sound internal control system in organization. Pdf multiple taxation as a bane of business development in. The treaty is expected to increase investments into nigeria given the key treaty benefit of mitigating and avoiding double taxation between. This is to ensure that the tax payable in nigeria on the profits of a nigerian company being remitted into the country are reduced by the amount of foreign tax paid abroad and vice versa. In nigeria, the oecd model has served as the basis on which most of the current double taxation treaties dtts with other countries have been formulated. Double taxation agreements are reproduced under the terms of. H t e in c h te i c a r it e r v t s e r e attempt all.
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