The Federal Inland and Revenue Service (FIRS) has issued an information circular on:
Commencement and cessation rules - The FIRS clarified that a company that commences business should apply the Preceding Year Basis (PYB) for all the years of assessment during commencement. In respect of cessation, the final tax year is from the beginning of the last accounting period to the date of cessation. The cessation returns are to be filed 6 months after the cessation date.
Business reorganisation - The FIRS clarified that, subject to meeting prescribed conditions:
- Commencement and cessation rules will not apply
- Assets would be transferred at Tax Written Down Value (TWDV), i.e. there will be no balancing adjustments.
- Capital Gains Tax (CGT) will not apply on the assets transferred.
- Value Added Tax (VAT) will not apply on the assets transferred.
Read our alert and the FIRS circular for details:
Originally published May 14, 2020.
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