Oserogho & Associates

Some of the objectives of the proposed Income Tax (Transfer pricing) Regulations, 2012 as published by the Federal Inland Revenue Service in pursuance of the powers conferred on it by Section 61 of the Federal Inland Revenue Service (Establishment) Act include the provision to the Nigerian tax authorities, tools to fight tax evasion, which is usually promoted through over or under–pricing of transactions between associated enterprises not adhering to the arm’s length tax principle.

Withholding Tax is a mandatory advance tax payment which is deducted and withheld from any income or disbursement due to a taxable person, for onward remittance to the relevant tax or government collecting authority, against a final tax liability. This advance tax payment can be set-off against the final tax obligation(s) of the taxable person subject to such person applying for and obtaining the Withholding Tax Credit Notes in respect of each advance tax withheld and remitted.

The general perception that dormant companies are not liable to pay any tax at all as they are not engaged in any trade or business is not correct. As a tax-avoidance measure, Minimum Tax is charged on the higher amounts of such a dormant company’s gross profit, or its net assets, or its paid-up share capital, or its turnover, at the rates stated in this article. The only exemptions to this rule are as also stated in this article.

Partnership is one of the most common forms of establishing a business in Nigeria. The culture of sustaining long-term Partnerships that thrives and outlive their original partners have however remained mostly a mirage in Nigeria. The Lagos State Partnership Law describes a Partnership to be the relationship which exists between people, carrying on business otherwise than as a limited liability company or incorporated trustees, with the sole objective of making and sharing profits.

Legal Alert – May 2012 – Admissibility of Electronic Evidence - The inestimable benefits of the various advancements in information and communication technologies have until the enactment of the new Evidence Act in 2011 remained a matter of much debate and judicial uncertainty. The enactment of the Evidence Act, 2011 has attempted to correct some of the difficulties that the admissibility of electronically generated evidence do encounter in Nigerian Courts.

A proper understanding of the various federal, state and local government licensing and regulatory regimes in the Hotels, Hospitality and Tourism markets in Nigeria is critical to the execution and substance of a viable business plan in any of these sectors. This Legal Alert is our contribution to your achieving this objective. - Legal Alert – April 2012 – Hotels & Tourism Licensing and Regulatory Regimes

The Personal Income Tax (Amendment) Act 2011 has among other things consolidated all the personal income tax reliefs or allowances into one consolidated tax allowance/relief of 21% of an individual's gross annual income. The residue of a person's income is then liable to a graduating personal income tax charge of between 7% to 24% per annum. The rules concerning expatriate income earned from businesses in Nigeria has also changed.

It is a criminal offense, under Nigerian law, for any person to commit, threaten, promote, fund, assist or facilitate any act preparatory to or in furtherance of, or the actual execution of any act(s) of terrorism. It is also a criminal offense for any person or group of persons to seize, detain or attempt to seize or detain, or threaten to kill or injure another person (or property) as a basis to induce the release of a terrorist.

The Money Laundering (Prohibition) Act 2011 provides for comprehensive provisions to prohibit the financing of terrorism, the laundering of the proceeds of a crime or of any illegal activity. This Law further provides for a wide range of penalties and expands the scope of the supervisory and regulatory authorities in Nigeria to combat money laundering offenses. The fact that a money laundering offense was committed in different jurisdictions or different parts of the world is no longer relevant.

A Sovereign Investment Authority (Establish, Etc.) Act, 2011 has established for Nigeria a Sovereign Investment Authority. This Authority is charged to receive, manage and invest in diversified portfolios the excess of the medium and long term revenue of the Federal, States, Local Governments and Area Councils. The Proceeds of these investments are statutorily required to create a savings base for the country, develop infrastructure that will attract local and foreign direct investments.