The world, as it is now, is recognized as a "global village" connected by international trade, telecommunications, internet, and migration of individuals across different jurisdictions. The phrase "Global Village" was introduced by Marshall McLuhan in 1964 to describe how standard of living will improve in future due to advancement in technology. Globalization, though, has its pros and cons especially as it relates to immigration and migration of nationals across different jurisdictions. An obvious con is reflected in the prevailing global pandemic, COVID – 19 (the Corona virus). Economies worldwide are struggling under the devastating effects of this pandemic. Central banks in various countries have pledged billions of dollars to support their economies, businesses and workers that have lost their jobs. Many countries have also enacted travel restrictions as a measure to combat the spread of the COVID – 19 pandemic.

How does this affect you as a taxpayer? How does this affect tax resident individuals with statutory obligation to file Personal Income Tax (PIT) in Nigeria? In this article, we examine the impact of the COVID – 19 pandemic on tax compliance for individuals.

Tax Residency

Residency is a key factor in taxation. There are no universal rules for determining the tax residence of a person. Different tax jurisdictions have different definitional rules of residence as contained in their respective income tax legislation and judicial pronouncements. Foreigners, who are upwardly mobile, may have tax residence determined by laws, which vary from jurisdiction to jurisdiction. Some countries determine individual residence based on physical presence, while others use a combination of factors such as location of permanent home, economic interests and family.

In the United States of America (US), a citizen is regarded as resident in the US irrespective of the length of stay abroad. This, as we will see, may potentially create a problem of dual tax residence.

In Nigeria, individuals are expected to pay their PIT to the state in which they are deemed resident and to file tax returns annually. In Nigeria and some other jurisdictions across the globe, one of the criteria for determining of tax residency of non-nationals is physical presence. A person is deemed tax resident in Nigeria, if he/she exercises duties of employment in Nigeria. The residence risk for expatriates under foreign employment can be triggered where the duties of employment are carried out in Nigeria for a period of 183 days or more (including temporary period of leave or absence) in a 12-month calendar year. There is also the case of Nigerians with tax filing and payment obligations in the country and who, because of their economic status, are highly internationally mobile.

Enters COVID-19.

Mrs. X, an employee of a manufacturing company based in the US, travelled to Nigeria in November 2019 to conduct a market survey in the country for a period of five months. At the end of the period, she is unable to travel back to the US because of closure of the airports to control the spread of the COVID-19 pandemic. This very event potentially changes her tax residency status from a non-taxable individual to a tax resident individual in Nigeria, with the attendant tax payment and tax filing obligations. On a closer look, this will also create a problem of dual tax residency risk for her as she is deemed taxable in the US by virtue of her citizenship based on applicable laws of the US.

Mr. Y, a wealthy Nigerian who has never defaulted in making his annual tax renditions in the country, travels abroad just about the time the Corona virus starts to spread across the world. Unfortunately, Mr. Y is unable to travel back to the country to fulfil his annual tax obligations as all airports in both Nigeria and his host country are on lockdown.

The above scenarios may not be as dire in some other jurisdictions, but in Nigeria, where tax rendition in many States is still done physically and manually, tax compliance status of individuals will likely be affected by the spread of the Corona virus and the attendant travel restrictions imposed by countries across the globe.

COVID-19 and Tax Compliance

A very rational and logical argument can be made to support the fact that the outbreak of corona virus makes it very difficult to comply with periodic tax filing obligations if one is to stay alive. Afterall, a taxpayer is only one when he is alive. One can also add that the outbreak of corona virus has significant negative impact on businesses generally. The terms of many contracts have had to be renegotiated in the light of the above. The need for social distancing and self-isolation during this period of COVID–19 pandemic has gravely affected the ability of tax payers to meet these tax compliance deadlines in jurisdictions where tax filling system has not been fully digitalized.

Unfortunately, the law, they say, is an ass. The fact that there is an ongoing pandemic does not automatically absolve taxpayers of their statutory tax payment and filing obligations. All tax resident individuals are, by virtue of Section 41 of the Personal Income Tax Act CAP P8 LFN 2004 (as amended) 2011, required to file return of their income in the prescribed form (" Form A") and detailing specific information in relation to their income and taxes thereon with the tax authority of their State of residence. This return is expected to be filed not later than 31st of March of each year. In the absence of a newer law suspending or overriding the above, taxpayers still have to comply with their tax filing obligations before end of March.

As a palliative move, the Executive Chairman of the Federal Inland Revenue Service ("FIRS") on 23 March 2020, sent out a notice informing taxpayers that the FIRS has extended the timeline for filing VAT and Withholding Tax (WHT) returns to the last working day of the month, following the month of deduction. This information was communicated via a four-page publication on the FIRS' official twitter handle. Some State tax authorities have issued similar directives as regards filing of annual returns for individuals. For example the Lagos State Internal Revenue Service (LIRS) has issued a public notice extending the deadline for filling annual returns for individuals to 31st May 2020. It is hoped that other States in the country will also follow suit.

What You Need to Do

What is key from the above is the need to fully digitalize the tax filling system in Nigeria and completely do away with the mundane practice of manual tax fillings at the office of the tax authority. Recent legislation in Nigeria are already tilting towards this direction. The Finance Act 2019 already provides an avenue for taxpayers to submit a valid notice of objection through electronic means. In a well-digitalized tax filing system, the effect of a pandemic such as COVID-19 will be minimal. State governments should invest in technological infrastructure that will ease the process of tax payments. The current pandemic has again shown that States actually lose out in tax revenue where the tax administration system is not digitized.

As a tax resident, it is very important to engage tax advisers early enough to afford you ample time to plan your tax affairs appropriately. It is important to seek professional assistance at this time. The more advice you obtain from tax professionals, the better informed your decisions would be. Such tax professionals can assist you ensure your tax obligations are fulfilled within the timeline provided by the law. They can also help you obtain private ruling from state tax authorities for an extension of time to file your tax returns. As earlier explained, the COVID-19 pandemic does not amount to an automatic exemption from tax renditions.

For taxpayers with international dual residency, you should seek tax advice on how to manage your economic affairs in a way that leaves minimal footprints for you and your businesses. This will become more important in the months ahead, especially as the spread of the corona virus may continue to generate revenue losses for governments, companies and individuals alike.


Taxpayers should be diligent and proactive in management of their tax affairs, businesses and transactions and ensure that they are tax compliant at all times irrespective of any subsisting global or national crisis. For those stuck outside of the country and for those who do not know how to navigate the challenges brought about by the COVID-19 in fulfilling their tax obligations, we advise you contact a seasoned tax consultant to assist you fulfil your obligations to the Government. State governments should also ease the process of tax compliance by digitizing their respective tax administration system.

Andersen Tax is a global firm with a wealth of knowledge in various areas cutting across transaction advisory, business restructuring, payroll management and advisory practice, family wealth practice, private client services, restructuring, book-keeping, tax advisory, and regulatory service, amidst others. We will be happy to work with you and ensure that you are compliant with provisions of all applicable tax laws at all relevant times and in any given situation. We operate in a manner that accommodates terms of business that individuals and emerging businesses can afford, without compromising on quality.

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.