Introduction
The fiscal changes introduced in 2021 demonstrate the FGN's commitment to improving Nigeria's tax and regulatory landscape, especially following the effects of the COVID-19 pandemic on the economy. As a result, Nigeria's GDP grew by 4.03% (year-on-year) in Q3 2021, showing a sustained growth over the last four quarters since the recession witnessed in Q2 2020. The economic growth may be attributed to the recovery in crude oil prices and production, while incremental changes to the fiscal framework, such as the Finance Act, 2020, enactment of provisions and regulations to capture digital services and leveraging of technology to improve tax and regulator administration have boosted non-oil revenues.
The FGN in a bid to consolidate on the wins in 2021 has designed the 2022 "Budget of Economic Growth and Sustainability" to achieve diversification of the economy with renewed focus on strategies for continued development and growth of the Micro, Small and Medium Enterprises. It is, therefore, hoped that with the continuous improvements of the regulatory and fiscal laws, Nigeria's economy will witness a sustained growth in 2022.
This publication provides a summary of the key events that occurred in the Nigerian tax and regulatory space in 2021 and highlights the outlook for 2022 which should be anticipated by the stakeholders as the year unfolds.
Federal Tax Issues
1.1. Guidelines on simplified VAT compliance regime for non-resident suppliers
The Federal Inland Revenue Service (FIRS) issued Information Circular No.: 2021/19 on Guidelines on Simplified Compliance Regime for Value Added Tax (VAT) for Non-Resident Suppliers (NRSs) of goods, services, or intangibles to persons in Nigeria through electronic, digital or similar platforms.
The Circular was issued pursuant to the provisions of Section 10(5) of the VAT Act Cap.V1 LFN 2004 (as amended) and replaces other notices and publications issued by the FIRS in this regard. The Guidelines was scheduled to take effect from 1 January 2022 with respect to supply of services and intangibles, and 1 January 2024 for goods. Although there are still concerns regarding some of the provisions of the Guidelines, it is hoped that the FIRS will update the Circular to address some of these issues before it becomes operational.
Please click here to read our Newsletter on the Guidelines.
1.2. Petroleum Industry Act, 2021
His Excellency, President Muhammadu Buhari, GCFR, on 16 August 2021, signed the Petroleum Industry Act (PIA), 2021 into law, following its passage by the National Assembly in July 2021. The PIA introduced significant changes to the regulatory and fiscal framework for the Nigerian petroleum industry, the development of host communities, and related matters. The PIA also repealed various pieces of legislation that governed the oil and gas industry prior to its enactment.
Please click here to read our Newsletter on the PIA.
1.3. Value Added Tax (Modification Order), 2021
The VAT (Modification) Order, 2021 ("the Order") was signed on 30 July 2021 by the Honourable Minister of Finance, Budget and National Planning (HMoFBNP), Mrs. Zainab Shamsuna Ahmed, pursuant to her powers under Section 38 of the VAT Act, Cap. V1, Laws of the Federation of Nigeria, 2004 (as amended). The Order was subsequently published by the Federal Government of Nigeria (FGN) in its Official Gazette No. 167, Vol.108 of 21 September 2021.
The Order replaced the VAT (Modification) Order 2020, amends the First Schedule to the VAT Act by defining and expanding the list of goods and services listed in the First Schedule to the VAT Act, and provides clarification on the amendments introduced to the VAT Act by Finance Act, 2020.
Click here to read our Newsletter on the Order.
1.4. Introduction of TaxPro-Max e-filing platform
On Friday, 4 June 2021, the FIRS issued a Public Notice providing guidelines on the administration of its TaxProMax e-filing platform ("the Platform"). The Platform was introduced to facilitate ease of tax registration, filing, payment, and automated issuance of withholding tax (WHT) and other credits to taxpayers' accounts. Consequently, taxpayers were required to submit all Naira-denominated tax returns on the Platform from 7 June 2021.
Please click here to read our Tax Alert on the subject.
1.5. Guidelines on the validation of unutilized withholding tax credit notes
The FIRS issued Information Circular No.: 2021/07 ("the Circular") providing guidelines on the validation of unutilized WHT credit notes in line with its mandate to achieve full automation of WHT administration. The Circular was issued pursuant to the provisions of Section 25(4) of the FIRS Establishment Act (FIRSEA), 2007 (as amended), and provides procedures for validation of unutilized physical WHT credit notes under expected and exceptional circumstances.
Please click here to read our Tax Alert on the subject
1.6. Deployment of Automated Tax Administration System
On 30 March 2021, the FIRS issued a Public Notice announcing its intention to commence the deployment of its Automated Tax Administration System (ATAS or "the System"). The ATAS will access for tax purposes, relevant data, information, records, etc., held in systems, electronic devices, or cloud computing facilities, including point of sales or invoicing platforms maintained, operated, owned, or controlled by taxpayers or their agents.
Please click here to read our Tax Alert on the subject.
1.7. Tax offices for tax filing by Approved Enterprises in Free Trade Zones, etc
On Tuesday, 30 March 2021, the FIRS published the list of its tax offices designated for filing of income tax returns by Approved Enterprises (AEs) operating in Nigeria Export Processing Zones and Oil & Gas Free Zones (collectively called "the Zones") further to the amendment of Section 18(1) of the Nigeria Export Processing Zones Authority Act and Oil and Gas Free Zone Authority Act ("the Acts") by Finance Act, 2020.
The amendment to Section 55 of the CIT Act requires AEs to submit their income tax returns with the FIRS. Therefore, the FIRS assigned tax offices based on geopolitical locations of the Zones for ease of compliance.
Please click here to read our Tax Alert on the subject.
1.8. Guidelines on the taxation of NGOs
In April 2021, the FIRS issued Information Circular No.: 2021/01 ("the Circular") providing guidelines on the taxation of incomes of Non-Governmental Organisations (NGOs) and other statutory obligations on their operations and activities, pursuant to the relevant legislation. The Circular outlined registration and income tax filing requirements for NGOs as well as their CIT, Personal Income Tax, VAT, and CGT obligations.
Please click here to read our Tax Alert on the subject.
1.9. Guidelines on the applicability of VAT on financial services
The FIRS in April 2021 issued Information Circular No.: 2021/04 ("the Circular") to provide clarification on what will constitute a supply of taxable services by financial institutions (FIs), in line with the provisions of the VAT Act, Cap. V1, LFN, 2004. The Circular outlines the tax obligations of FIs and provided detailed clarification on the administration of VAT on services provided by FIs.
Please click here to read our Tax Alert on the subject.
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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.
