The agreement for the avoidance of double taxation is useful for establishing a single point of taxation, for eliminating the current regime where income derived from one of the two locations was taxed in both jurisdictions. Its an easier way for the government to get more people to pay their tax. Again, the issue of whether the tax should be levied on the profits of the company rather than on its turnover is another issue of controversy6. This, however, does not create opportunities for nontaxation or tax. Republic of nigeria, desiring to conclude an agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital gains, have agreed as. Companies resident in nigeria are assessable to tax on their worldwide income, whilst nonresident companies are subject to tax on profits accrued in or derived from nigeria, to the extent that the profits are not attributable to operations outside nigeria. Article 24 elimination of double taxation this article discusses the methods of elimination of double taxation. Double taxation agreement dta for developing countries kentaro ogata imf. Pdf the issue of multiple tax practices has always generated and continues to generate controversy among the tiers of government in nigeria. The objective of this study is to investigate the impact of taxation on economic development of nigeria proxy by the gross domestic product gdp. Compute the tax payable in nigeria by the company for.
Establishment of sound internal control system in organization. Meanwhile, it is worthy of note that nigeria s double tax treaties is a far cry from the number which other developed and developing countries have. These include capital gains or income derived from movable or immovable property rent, for example. Atswa institute of chartered accountants of nigeria.
Taxation in nigeria plus history of taxation in nigeria. The corporation is taxed on its earnings profits, and the shareholders are taxed again on the dividends they receive from those earnings. Improved double tax arrangements in nigeria deloitte nigeria. Double taxation relief between the federal republic of nigeria and the united kingdom of great britain and northern ireland order under section 451 commencement.
Unfortunately, we are far behind on tax law reform in nigeria as the last time any business tax legislation was enacted or. All over the world, residence and source based taxation are two principles which drive the taxation of corporate players in international. In nigeria, nobody can dispute the fact that though this taxes are been collected, they are. Taxation in nigeria and history of taxation in nigeria a tax in nigeria is a compulsory levy imposed by the federal government of nigeria on individuals and corporate entities in respective of return of service expected from the government. Nigeria pursuant to articles 287 and 294 of the convention. Double taxation agreementstreaties nigeria has a number of tax treaties referred to as double taxation agreements with a number of countries. Most of our members are trust and management companies licensed by the financial services commission fsc. Tax treaties and related documents between the uk and nigeria. Nigerias double tax treaties is a far cry from the number which other developed and developing countries have. Individuals are subject to tax under the personal income tax act as amended. Tax policy forms the basis for tax laws while tax administration is the implementation of the tax laws. Double tax treaty and nontreaty rates of tax withholding relating to the payment. Article 4 application of methods for elimination of double taxation notification of existing provisions in listed agreements pursuant to article 44 of the convention, nigeria considers that the following agreements contain a. The administration of tax in nigeria is vested in the various tax authorities depending on the type of.
In this post we look at the problems and prospects of taxation in nigeria. Effects of multiple taxation on the performance of small. Even after some tax policies the tax authority has put in place over the few years such as the e payment scheme, tax identification number. Double taxation agreements are reproduced under the terms of.
Consequently, the government has implemented several initiatives in this regard. Taxation of nonresident companies in nigeria the significant decline in oil prices, oil theft and the vandalization of oil pipelines have adversely affected the nigerian governments revenue. The nigeria tax system, like any tax system, is a tripartite structure which comprises of. This, however, does not create opportunities for non taxation or tax avoidance. This information is useful for policy makers, implementation and for research purposes. Nigeria ratifies double tax agreement with spain ey global.
Of the federal republic of nigeria for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains the government of the united kingdom of great britain and northern ireland and the government of the federal republic of nigeria. Double taxation the chapter contains only 1 article. Double taxation relief between the federal republic of nigeria and the government of the kingdom of belgium order 1997 under section 451 commencement. Double taxation relief between the federal republic of. Aug 20, 2019 double taxation is a tax principle referring to income taxes paid twice on the same source of income. The united kingdom, the netherlands, canada, south africa, china, philippines, pakistan, romania, belgium, france, mauritius, south korea and italy. Abiola sanni, phd, fcti senior lecturer department of commercial and industrial law university of lagos, nigeria 1. The united kingdom, the netherlands, canada, south africa, china, philippines. New double tax treaty between singapore and nigeria. Nigeria currently has dtts with thirteen countries namely. In another way round, nigeria cannot afford to operate contradictory legislation whereby one will create a right and the other one will negate it. The double taxation relief taxes on income nigeria order 1987. The double taxation agreement entered into force on 27 december 1987. Implications of multiple taxation on the economy omesi, israel mba, ph.
The treaty is expected to increase investments into nigeria given the key treaty benefit of mitigating and avoiding double taxation between. Based on international trade convention, every country is allowed to adopt laws, rules and regulations that govern its trade relationships with other countries in a way that enables it. Over the years, nigeria has entered into bilateral double taxation agreements henceforth referred to as. Tax policy, tax legislation and tax administration. In all nigeria treaties, elimination of double taxation is granted by credit method. Many of them have covered all its ramifications while some have effectively appraised the problem of tax administration in.
Formed in 1997, the atmc is the flagship representative body in the global business industry. Its effective in nigeria from 1 january 1988 and in the uk from. The federal republic of nigeria for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital the kingdom of spain and the federal republic of nigeria, desiring to conclude an agreement for the avoidance of double taxation and the. Avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on. Apr 29, 2019 double taxation is a term used to describe the way taxes are imposed on corporate shareholders and on corporations. Double taxation agreement between china and nigeria. The purpose of the agreements between the two tax administrations of two countries is to enable the administrations to eliminate double taxation. It can occur when income is taxed at both the corporate level and personal level. The final section of each country summary sets out the double tax treaty and nontreaty rates of tax withholding relating to the payment of dividends, interest, royalties and other related payments. Application of the income tax treaty measures to address double taxation.
This is in addition to other factors such as security, availability and access to power, rule of law etc. This publication is a summary of the major tax laws in nigeria, prepared for. Pdf the nigerian government commitment to diversify its sources of. The double taxation agreements dtas and protocols that are already in force, have been divided into two groups to make navigation easier, i. Based on international trade convention, every country is allowed to adopt laws, rules and regulations that govern its trade relationships with other countries in a way that enables it achieve the desired strategic objectives. Taxation and economic growth in nigeria onakoya, adegbemi babatunde1 afintinni, oluwatobi ibukun2 1,2department of economics, banking and finance, babcock university, ilishan remo, nigeria abstract over several decades, taxation has been taken as a veritable medium of engineering the growth or performance of an economy. This is to ensure that the tax payable in nigeria on the profits of a nigerian company being remitted into the country are reduced by the amount of foreign tax paid abroad and vice versa. Avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains the government of the federal republic of nigeria government of the united kingdom of great britain and northern ireland. Double taxation relief between the federal republic of nigeria and the government of romania order 1997 under section 451 commencement.
International taxation double taxation avoidance agreements. Nigeria concludes double tax treaties with ghana and cameroon. Map guidelines, double taxation disputes kpmg global. Double taxation agreements treaties nigeria has a number of tax treaties referred to as double taxation agreements with a number of countries. Nigeria where there is no relief from double taxation in nigeria, are. Review of mauritius nigeria double taxation treaty background information in august 2012, representatives of the governments of mauritius and nigeria signed an income tax treaty. I professor of accounting, department of accounting, kogi state university, anyigba, nigeria.
Japan high level tax conference for asian and pacific countries. However, given that the laws of the federation of nigeria are compiled in several volumes, the latest comprising of 14 volumes, it follows that a person whose interest traverses more than one tax type at any given time must necessarily consult several volumes simultaneously. In august 2012, representatives of the governments of mauritius and nigeria signed an income tax treaty. Taxation, the world over, has been viewed as a method of mobilizing and sustaining a nations financial resources.
Pdf multiple taxation as a bane of business development in. Also signed was a protocol for the treaty which agreements contain measures providing beneficial tax rates for dividends, interest, and royalties. Nigeria currently has inforce double tax treaties for taxes on income and capital. H t e in c h te i c a r it e r v t s e r e attempt all. Aug 23, 2018 the federal government of nigeria fgn concluded the negotiation of double taxation agreements the dtas with the republic of ghana and the republic of cameroon on 26 july 2018 and 3 august 2018, respectively. Nigeria agreement between the kingdom of the netherlands and the federal republic of nigeria for the avoidance of double taxation and the prevention of fiscal evasion with respect to. Scope of the study tax revenue generated by the federal government of nigeria and tax revenue generated by some selected states were obtained in order to assess the impact of taxation on revenue generation by the federal government of nigeria and by some selected states in nigeria from 20022011. To this end, it is imperative that nigeria leverages on its status as the largest economy in africa and. Of the republic of ghana for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains the government of the united kingdom of great britain and northern ireland and the government of the republic of ghana.
Nigeria and belgium has a double taxation agreement, with article 23 of the agreement providing for credit method of elimination of double taxation. Nov, 2019 avoidance of double taxation agreement between the federal republic of nigeria and the kingdom of spain domestication and enforcement act, 2017. Desiring to conclude a convention for the avoidance of double taxation and the. The above unethical tax practices could be minimized by. Pdf multiple tax practices and taxpayers noncompliance. In nigeria, the oecd model has served as the basis on which most of the current double taxation treaties dtts with other countries have been formulated. I department of accounting, kogi state university, anyigba, nigeria. Government, tax administrators, practitioners and academics alike. The double taxation convention entered into force on 10 august 1994 and is effective in. The views expressed herein are those of the author and should not be attributed to the imf, its executive board, or its management. Double taxation agreements are reproduced under the terms. All you need to know a withholding tax is a system of taxation.
Among the items addressed in nigerias map guidelines pdf 123. An act to domesticate and enforce in nigeria the avoidance of double taxation between the federal republic of nigeria and the kingdom of spain and for related matters. The income tax department never asks for your pin numbers, passwords or similar access information for credit cards, banks or other financial accounts through email the income tax department appeals to taxpayers not to respond to such emails and not to share information relating to their credit card, bank and other financial accounts. Double taxation is the levying of tax by two or more jurisdictions on the same income in the case of income taxes, asset in the case of capital taxes, or financial transaction in the case of sales taxes. Pdf the study examines the appropriateness of multiple taxes in developing nations like nigeria. The federal government of nigeria nigeria, on 26 january, 2018, ratified the double tax agreement the treaty between the federal republic of nigeria and the kingdom of spain making it a part of the countrys domestic law. Taxation is a significant consideration for foreign investors who seek to do business in nigeria. Double taxation occurs when an entity or individual is taxed on the same income by different countries at the same time. Avoidance of double taxation and prevention of fiscal evasion with respect to taxes on income and on capital gains. Desiring to conclude an agreement or the avoidance of double taxation and the prevention of fiscal evasion with. Effects of multiple taxation on the performance of small and medium scale business enterprises in benue state ocheni, s. Among the tax incentives usually utilized in nigeria are capital allowances, capital gains tax reliefs, company income taxes, value added tax, tax holiday and double taxation treaties or agreements olaleye, 2016. Double taxation agreements between nigeria and other countries and provisions of relevant tax laws. The double tax treaty dta between singapore and nigeria applies on all taxes on income or elements of income.
The role of taxation in promoting economic growth in nigeria is not fully felt, and optimal tax is not been realized that can engine economic growth primarily because of its poor administration. Notification of choice of optional provisions pursuant to article 66 of the convention, nigeria hereby chooses to apply article 63. Double taxation is an impediment because it devours the main purpose for which an investor is investing which is to maximize profits the problem of double taxation was resolved by the enactment of double taxation treaties. Republic of nigeria, desiring to conclude an agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital gains, have agreed as follows. The objectives of tax treaties include prevention of double taxation.
While the africa tax guide should not to be regarded as offering a complete explanation of the taxation. Taxpayers also may want to consider the map guidelines in initiating prefiling consultations with the nigeria competent authority when there are unresolved double taxation matters. Introduction following the emergence of multiplicity of taxes in the nigerian fiscal landscape, 1 the joint tax. To this end, it is imperative that nigeria leverages on its status as the largest economy in africa and takes advantages of the benefits dtts offer. Read an april 2019 report pdf 128 kb prepared by the kpmg member firm in nigeria. Over the years, nigeria has entered into bilateral double taxation agreements henceforth referred to. Implications the ratification of the treaty is a positive development between the two countries.
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