ARTICLE
10 August 2016

Ministry Of Trade And Investment Insists That Companies Must Obtain Approval For Their Assets

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PwC Nigeria

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PwC Nigeria is one of the leading professional services ?rms in Nigeria with of?ces in Lagos, Abuja and Port Harcourt, with over 1,000 staff and 31 resident partners. We are committed to serving as a force for integrity, good sense and wise solutions to the problems facing businesses and the capital markets. We are guided by one promise – to do what is right, be it with our people, clients, community, or environment.
In practice, FIRS may disallow capital allowances claimed on fixed assets if the appropriate CAFA has not been obtained from the Industrial Inspectorate Department.
Nigeria Tax

In practice, FIRS may disallow capital allowances claimed on fixed assets if the appropriate Certificate of Acceptance for Fixed Assets "CAFA" has not been obtained from the Industrial Inspectorate Department.

In addition, the Financial Reporting Council of Nigeria (FRCN) recently published rules which prohibit the recognition of transactions in the financial statements of a company if such transactions require regulatory approvals that have not been obtained. CAFA falls into this category of transactions and potentially means that a company may not be able to recognise its non-current assets in the financial statements unless CAFA has been granted for the relevant financial periods.

Although it is difficult to see any useful purpose being served by this regulatory approval, it is nonetheless important for companies to comply in order to avoid potential tax exposures and sanctions by the FRCN.

Read our tax alert for more: Download PwC Tax Alert_Acceptance Certificate for Assets_Aug 2016

Copies of letter from Ministry of Trade and FRCN Rules for reference:

Download Sample letter from IID on CAFA compliance

Download FRCN rules

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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