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ICLG-Private Client 2019

ICLG-Private Client 2019



1 Connection Factors

1.1 To what extent is domicile or habitual residence relevant in determining liability to taxation in your jurisdiction?

Answer Text.  

Domicile or habitual residence is relevant in determining tax liability in Nigeria. The Personal Income Tax Act, 2011 Laws of the Federation of Nigeria provides for taxing of persons based on the state where such person resides. Section 2 (1) (A) and (2) of the Act provides that Personal Income Tax shall be paid for each year of assessment on the total income of every individual based on the State where the tax payer resides, in the relevant year of personal income tax assessment, and not based on where the individual tax payer works or carries on business.

1.2 If domicile or habitual residence is relevant, how is it defined for taxation purposes?

Answer Text.

It is the place where the income or profit taxed was earned or generated in the relevant tax period.

Refer to 1.1 above.

1.3 To what extent is residence relevant in determining liability to taxation in your jurisdiction?

Answer Text.

Residency is a key factor in taxation, since a taxpayer is generally liable to payment of taxes to the state where he is resident. 

The rules of determination of residence are detailed out in the first schedule to the Personal Income Tax Act (PITA). 

1.4 If residence is relevant, how is it defined for taxation purposes?

Answer Text.

Yes, residency determines taxation matters to a large extent in Nigeria.

1.5 To what extent is nationality relevant in determining liability to taxation in your jurisdiction?

Answer Text.

The relevant legislation which regulates taxation matters for individuals in Nigeria is the Personal Income Tax Act (“PITA”). There are no special provisions in PITA for expatriates. The provisions as they relate to individuals who are deemed resident in Nigeria apply to both local and expatriates employees in Nigeria. Consequently, the nationality of an individual is not relevant in determining liability. 

1.6 If nationality is relevant, how is it defined for taxation purposes?

Answer Text.

The relevant legislation which regulates taxation matters for individuals in Nigeria is the Personal Income Tax Act (“PITA”). There are no special provisions in PITA for expatriates. 

It is defined in terms of income arising in, or derived from Nigeria. Hence, Nigeria would have the first right to tax for income brought into Nigeria; credit will be granted for the tax paid in the country where the income arises.

1.7 What other connecting factors (if any) are relevant in determining a person’s liability to tax in your jurisdiction?

Answer Text.

Tax liability attaches to the assets and incomes belonging to or accruing to persons which may, within the context, include natural and corporate persons under the laws in force in Nigeria. It means that for every person or group of persons who have assets or earn one form of income or the other, tax liability may attach to them. 

The streams of income which would be relevant here are quite broad and include incomes from salaries, wages, loans, gifts, inheritance, dividends, net profit/gain, bonuses, allowances, gratuities, reimbursements, investment returns, insurance, and the likes. For a body with artificial personality, tax liability may attach to it from the day it begins to hold assets or conduct business. However, our focus in this article is on natural persons.

2 General Taxation Regime

2.1 What gift or estate taxes apply that are relevant to persons becoming established in your jurisdiction?

Answer Text.

There are no regulations that impose gift, wealth, estate, and/or inheritance taxes in Nigeria, the grant of administration is usually subject to the payment of appropriate estate duties imposed by the probate court where the application is made after assessment of all the deceased’s assets has been disclosed. The rate is usually 10 percent charged on the estate of the deceased .

While in respect to Real Estate conveyance tax S.22 of the Land Use Act talks about powers vested in the Governor of a state to devolve any interest in land. Consent fees vary and may be as high as 30 percent of the market value of the interest being conveyed. 

2.2 How and to what extent are persons who become established in your jurisdiction liable to income and capital gains tax?

Answer Text.

The law places certain tax obligations on expatriates and Nigerian nationals with respect to incomes earned in or derived from Nigeria. Expatriates in Nigeria are subject to the same taxes as Nigerian nationals on their personal income. An expatriate’s assessable income for tax purposes with respect to income from his/her employment is the amount of the income of the particular year of assessment. 

Also, in respect to capital gains tax is charged on capital gains accruing to any legal person (company or individual) when disposal of chargeable assets occurs. The rate of CGT is ten per cent (10%) of gain derived when assets are sold.

2.3 What other direct taxes (if any) apply to persons who become established in your jurisdiction?

Answer Text.

Other direct taxes are; 

1) Stamp Duties;

2) Capital Gains Tax (CGT);  

3) Property Tax charged;

4) Pay as You Earn Taxes applicable only to non-resident who enters into the country on an expatriate quota (document obtained from the immigration office permitting a company to import the services of expatriates) and the non-residents have duly obtained residence permits.

5) Withholding tax is an advance tax deduction from any income paid in Nigeria,

6) Development Levy paid by individuals.

2.4 What indirect taxes (sales taxes/VAT and customs & excise duties) apply to persons becoming established in your jurisdiction?

Answer Text.

1) Taxes other than Value Added Tax (VAT), Customs and Excise Duties (CED)include; 

2) Licences for wide range of public amenities like  sewage disposal.

3) Petroleum Profit Tax (PPT) and Education Tax – imposed on all corporate entities registered in Nigeria; 

4) Technology Levy – imposed on selected corporate entities in Nigeria to support nationwide development of technology infrastructure and capacity.

2.5 Are there any anti-avoidance taxation provisions that apply to the offshore arrangements of persons who have become established in your jurisdiction?

Answer Text.

The Double Tax Treaty is one of the anti-avoidance taxation provisions that can apply to persons who become established in Nigeria. One can state that countries who have signed the Double Taxation Treaty(DTT) have to a large extent more advantage over other Non – residents whose country do not belong to the DTT .

2.6 Is there any general anti-avoidance or anti-abuse rule to counteract tax advantages?

Answer Text.

Anti-avoidance or anti-abuse rules that may prevent tax advantages are;

  1. Multiplicity of tax payment by the taxpayers to the various tax authorities ranging from the Federal Inland Revenue, State Inland Revenue Board and Local level.
  2. Double Taxation for countries who have not entered the Double Taxation Treaty(DTT) with Nigeria may find it challenging being liable to pay tax in two countries.

Are there any arrangements in place in your jurisdiction for the disclosure of aggressive tax planning schemes?

Answer Text.

The Federal Government amended the tax laws which have given rise to increased focus on the measures being put in place to curb tax avoidance schemes by the Organization for Economic Cooperation and Development (OECD).

The measures include the Base Erosion and Profit Shifting (BEPS) Project, involving fifteen workable action plans. These are to equip governments with domestic and international instruments to address aggressive tax planning/avoidance. Furthermore, in order to discourage sharp practices by individual and corporate taxpayers alike, laws known as General Anti-Avoidance Rule (GAAR) statutes, which prohibit “tax aggressive” avoidance have been passed in several countries inclusive of Nigeria.

For instance, a generic GAAR in Nigeria is contained in Section 22 of the Companies Income Tax Act (“CITA”)2 .Similarly, GAAR are contained in Section 17 of the Personal Income Tax Act (“PITA”)3; Section 20 of the Capital Gains Tax Act (“CGTA”)4; and Section 15 of the Petroleum Profits Tax Act (“PPTA”),5 respectively.

3 Pre-entry Tax Planning

3.1 In your jurisdiction, what pre-entry estate and gift tax planning can be undertaken?

Answer Text.

There is no particular pre-entry estate and gift tax planning that should be undertaken.

3.2 In your jurisdiction, what pre-entry income and capital gains tax planning can be undertaken?

Answer Text.

The Companies Income Tax Act (CITA) governs the taxation of companies other than those carrying out petroleum operations. A Nigerian company is liable to tax on its worldwide income, while a non-resident company is charged tax on the income attributable to its Nigerian operations only while the legal framework for the taxation of individuals and unincorporated entities in Nigeria is the Personal Income Tax Act (PITA), CAP, LFN 2004 as amended. Resident individuals are taxed on their worldwide income while non-residents are liable for tax only in respect of income derived from Nigeria. A person is regarded as resident in Nigeria for personal income tax purposes if he or she spends 183 days or more in Nigeria within any 12-month period. Expatriates who come into Nigeria on expatriate quota positions are regarded as tax residents from the first day.

3.3 In your jurisdiction, can pre-entry planning be undertaken for any other taxes?

Answer Text.

The most significant incentive designed to encourage participation in the Nigerian capital market is the tax exemption from capital gains on disposal of shares and stocks. There is also an income tax exemption on income earned from debt instruments such as government and corporate bonds. In addition, withholding tax on dividend (which does not exceed 10%) is the final tax in the hands of investors.

4 Taxation Issues on Inward Investment

4.1 What liabilities are there to tax on the acquisition, holding or disposal of, or receipt of income from investments in your jurisdiction?

Answer Text.

Liabilities on tax are dependent on the nature of investment engaged in. Liabilities on acquisition by companies Income tax is chargeable on the income of all companies operating in the country except those specifically exempted under the Act.

There are two corporate income taxes applicable to taxable profits made by Corporate entities in  Nigeria which are; (CIT) pursuant to the CIT Act (CITA) and petroleum profits tax (PPT) pursuant to the PPT Imposition of tax and profits chargeable respectively.

4.2 What taxes are there on the importation of assets into your jurisdiction, including excise taxes?

Answer Text.

Capital gains tax (CGT)

Gains accruing to a chargeable person (individual or company) on the disposal of chargeable assets shall be subject to tax under the CGT Act at the rate of 10%. All forms of assets, including options, debts, goodwill, and foreign currencies, other than those specifically exempt, are liable for CGT. The gains on the disposal of shares are exempt from CGT.

CGT is applicable on the chargeable gains received or brought into Nigeria in respect of assets situated outside Nigeria. Custom duties are equally levied only on imports.

Customs duties in Nigeria are levied only on imports. Rates vary for different items, typically from 5% to 35%, and are assessed with reference to the prevailing Harmonized Commodity and Coding System (HS code).

4.3 Are there any particular tax issues in relation to the purchase of residential properties?

Answer Text.

Property taxes

Property taxes in Nigeria are usually levied annually by the state government with varying rates depending on the state and the location of the property within the state. The two major property taxes are governor’s consent fee and land registration fee. In Lagos (which is the economic hub of Nigeria), governor’s consent fee, land registration fees, and other levies payable to the state give rise to a total levy of 3% of the fair value of the land.

Also, Right of Occupancy fee and tenement rates are chargeable by state and local government authorities.

5 Taxation of Corporate Vehicles

5.1 What is the test for a corporation to be taxable in your jurisdiction?

Answer Text.

Resident companies are liable to CIT on their worldwide income while non-residents are subject to CIT on their Nigeria-source income.

The CIT rate is 30%, assessed on a preceding year basis (i.e. tax is charged on profits for the accounting year ending in the year preceding assessment).

5.2 What are the main tax liabilities payable by a corporation which is subject to tax in your jurisdiction?

Answer Text.

S. 55(4) of the Companies and Income Tax Act states the amount liable to be paid as penalty for incurring any tax liability payable by a corporation.

5.3 How are branches of foreign corporations taxed in your jurisdiction?

Answer Text.

They are taxed where the profits are derived from trade or business carried on by the exempt body or institution; they will be regarded as taxable profits.

6 Tax Treaties

6.1 Has your jurisdiction entered into income tax and capital gains tax treaties and, if so, what is their impact? 

Answer Text.

Nigeria has signed some Multilateral Competent Authority Agreements (MCAA) for the exchange of country-country reports/information on assets owned by Nigerians in foreign countries. Nigeria is also a signatory to the Avoidance of Double Taxation Agreement and has signed Double Taxation Treaties (DTT) with some other 22 countries. Even though, DTT have been signed with some countries, administrative bottlenecks and subsequent ratification by The National Assembly has caused delays in their enforcements.

6.2 Do the income tax and capital gains tax treaties generally follow the OECD or another model?

Answer Text.

The treaties follow the OECD and UN models, which are aimed at removing tax related barriers between the respective signatories and designed to assist business growth and prevent the incidence of tax evasion and double taxation.

6.3 Has your jurisdiction entered into estate and gift tax treaties and, if so, what is their impact?

Answer Text.

There are no formal treaties entered into with other countries. The provisions of The Wills Act 1837 (Statute of General Application) is applicable in states that are yet to enact their Wills Laws.

6.4 Do the estate or gift tax treaties generally follow the OECD or another model?

Answer Text.

No it does not follow any particular model.

7 Succession Planning

7.1 What are the relevant private international law (conflict of law) rules on succession and wills, including tests of essential validity and formal validity in your jurisdiction?

Answer Text.

Where a person writes a Will which does not pass the validity test, the person’s estate will be administered in the same manner as if he had died intestate. Furthermore, movable property of a person who dies interstate is governed by the law of the person’s last domicile while intestate succession to immovable property is governed by lex situs i.e the law of the place where the property is located.

7.2 Are there particular rules that apply to real estate held in your jurisdiction or elsewhere?

Answer Text.

Yes, there are set rules regarding real estate as land is vested in state government. S. 22 of the Land Use Act states that Governor’s consent is required for transfer of any interest in land situated in urban areas. Consent fees vary and may be as high as 30 percent of the market value of the interest being conveyed. However, there are some taxes or rates applicable to real estate transactions such as Real Property Tax, which is more popularly known as tenement rates. In Lagos State, The Land Use Charge Law, which is intended to be a single property charge, replaces all other State and Local Government taxes on real property, including taxes like tenement rates, ground rents and neighbourhood improvement charges. More so, other taxes payable include registration fees, stamp duties and capital gains tax. 

7.3 What rules exist in your jurisdiction which restrict testamentary freedom?

Answer Text.

Customary Limitation:

 The limitations placed upon a testator are dependent on the customary law applicable to him.

Of all the customary limitations that exist under customary law, the concept of ‘IGIOGBE’ under the Bini customary law[1] has been judicially noticed and pronounced upon severally by the courts that gives a testator the right to will out his property to no other person than the eldest son. This goes against the provisions of S.3 of the Wills Act, 1837.

Islamic Limitation:

A person is permitted to dispose only one-third of his Estate by Will to persons who are not his lawful heirs; the other two-thirds can only be given out to persons prescribed under Islamic law and in the manner prescribed by Islamic law.

Provisions for Family and Dependants:

The Wills Law of a few states like Lagos, Abia and Oyo recognise the right of certain family members or dependants to apply to the court on the ground that the testator in his will failed to make reasonable financial provision for the applicant.


8.1 Are trusts recognised/permitted in your jurisdiction?

Answer Text.

Yes, there are trust tools recognised in Nigeria.

8.2 How are trusts/settlors/beneficiaries taxed in your jurisdiction? 

Answer Text.

In determining the taxation treatment of trust transactions, the income and capital taxes that may apply to each of the settlor, the trustees and the beneficiaries have to be considered separately. Where the beneficiary is entitled under the trust documents to the income of the trust, such income is taxable on the beneficiary directly, while trustees are liable to pay Capital Gains Tax on any gains arising on the disposal of trust assets.

8.3 How are trusts affected by succession and forced heirship rules in your jurisdiction?

Answer Text.

Properties held in trusts must be definite and ascertainable. The objects of the trust must be performed before the beneficiaries can have access to any profit/dividend from the trust. The Land Use Act (Section 70) permits the grant of a statutory right of occupancy to a Trustee to hold on trust for the benefit of an infant. 

8.4 Are private foundations recognised/permitted in your jurisdiction?

Answer Text.

Yes they are. They are registered under Part C of The Companies and Allied Matters Act by The Corporate Affairs Commission (CAC).

8.5 How are foundations/founders/beneficiaries taxed in your jurisdiction?

Answer Text.

Foundations are not taxed in their corporate capacities as they are not profit making ventures; however, the founders/beneficiaries are liable to pay taxes based on income made in their personal capacities as provided for by The Personal Income Tax Act (PITA).

8.6 How are foundations affected by succession and forced heirship rules in your jurisdiction?

Answer Text.

Properties owned by the foundations are not subject to be distributed amongst the members but shall be transferred to some other organisations having similar objects, which shall be determined by members of the foundation otherwise transferred to some other charitable organisations as provided for by The Special Clause on Form CAC/IT/01.

9 Matrimonial Issues

9.1 Are civil partnerships/same-sex marriages permitted/recognised in your jurisdiction?

Answer Text.

A civil partnership entered into between persons of same sex is prohibited in our jurisdiction. Hence, the  Act criminalises and penalties for solemnisation and witnessing of the same sex marriage.

9.2 What matrimonial property regimes are permitted/recognised in your jurisdiction?

Answer Text.

The law as regards settlement of property under matrimonial causes states in Section 72 of the Matrimonial Causes Act dealing with settlement of property and several decided cases states that settlement of property is based on what the Court considers just and equitable in the circumstances of a particular case.

9.3 Are pre-/post-marital agreements/marriage contracts permitted/recognised in your jurisdiction?

Answer Text.

S. 72(2) of the Matrimonial Causes Act recognises the right of parties to execute pre and post-nuptial agreements. Although  there are no reported Nigerian case law on pre and post  nuptial agreements because they are not common in Nigeria. —————————————————————————————————————

 9.4 What are the main principles which will apply in your jurisdiction in relation to financial provision on divorce?

Answer Text.

In Divorce proceedings the court has the discretion to allocate financial provision of a party and the children to a marriage based o the following factors; means, earning capacity and conduct of the marriage and other relevant circumstances as provided in S. 70 and 72 of the Matrimonial Causes Act adequately provides same.

10 Immigration Issues

10.1 What restrictions or qualifications does your jurisdiction impose for entry into the country?

Answer Text.

S. 18 of the Immigration Act Cap 171, 1990 provides various classes upon which restrictions may be imposed into Nigeria.     

10.2 Does your jurisdiction have any investor and/or other special categories for entry?

Answer Text.

No, nothing really borders on investors. However, only a citizen of Nigeria can accept Employment(not being employment with the Federal Government or a State Government) without the writing to the Director of Immigration or on his own account or in partnership with any other person, practice a profession or establish or take over any trade or business whatsoever or register to take over any company with limited liability for any such purpose, without the consent in writing of the Minister given on such conditions as to the locality of operation and persons to be employed by or on behalf of such person, as the Minister may prescribe. 

10.3 What are the requirements in your jurisdiction in order to qualify for nationality?

Answer Text.

Section 28 of the Constitution of the Federal Republic of Nigeria 1999 states the requirements that shall qualify a person for nationality. This discretion is vested in the president of Nigeria. 

10.4 Are there any taxation implications in obtaining nationality in your jurisdiction?

Answer Text.

The Nigeria tax laws apply to tax payers on the basis of residence and not on nationality. As an

individual you are either a resident or a non-resident. If you are a resident, no matter your 

nationality, the same condition applies to you as a Nigerian resident.

10.5 Are there any special tax/immigration/citizenship programmes designed to attract foreigners to become resident in your jurisdiction?

Answer Text.

The following programmes were basically designed for foreign investors: Free Trade Zones (FTZ) have been designed to attract investors. There about 31 FTZs, 14 operational and 17 under construction as at April 2015. An FTZ entity enjoys the benefits of 100% capital and profit reparations, exemption from all Federal, state, and local governments taxes, levies and rates, and waivers on customs and import duties.

11 Reporting Requirements/Privacy

11.1 What automatic exchange of information agreements has your jurisdiction entered into with other countries? 

Answer Text.

On 27 Jan 2016, Nigeria and 31 other countries signed Multilateral Competent Authority Agreement (MCAA) for the automatic exchange of country by country reports.

11.2 What reporting requirements are imposed by domestic law in your jurisdiction in respect of structures outside your jurisdiction with which a person in your jurisdiction is involved?

Answer Text.

The establishment of Special Control Unit Against Money Laundering (SCUML) a Department of the Economic and Financial Crimes Commission (EFCC); having the responsibility to monitor, supervise and regulate the activities of non-profit making ventures in Nigeria. 

The introduction of Income Tax country by country reporting regulations of 2018; to provide FIRS with information about the activities, profits, taxes of MNE’s so as to curb the incidence of tax evasion as well as the Enforcement of Voluntary Assets and Income Declaration Scheme (VAIDS). 

Executive Order 008; signed into Law on the 8th of October 2018 which is meant to regulate money laundering and tax evasion and tagged “Voluntary Offshore Assets Regularisation Scheme” (VOARS); Eligible Taxpayers who hold offshore assets and generate incomes thereof are expected to, within a period of 12 months, voluntarily declare those assets and pay required taxes from such assets.

11.3 Are there any public registers of owners/beneficial owners/trustees/board members of, or of other persons with significant control or influence over companies, foundations or trusts established or resident in your jurisdiction?

 Answer Text.

There are no formal registers of identities of owners/founders/Directors/Trustees of companies/Foundations/Trusts open for public scrutiny. However, upon request and payment of the requisite fees, searches on the identities of persons within the category here above mentioned can be obtained from the relevant regulatory agencies such as The Corporate Affairs Commission (CAC )and Securities Exchange Commission (SEC). The Freedom of Information (FOI) Act 2011 also gives everyone the right to request  for information, whether or not contained in any written form, which is in the custody of any public official, agency or institution howsoever described.


Author:- Dr. Jennifer Douglas Abubakar & Maryam