8th November 2019
Nigeria, otherwise known as ‘the giant of Africa’, is fast becoming a hotspot for international contractors. Home to a staggering 202 million people, and seemingly unending oil reserves – things are looking bright for the 27th largest economy in the world. However, one area where the country has faced major challenges is tax evasion, with an annual $15 billion lost to non-compliance.
In fact, in 2018, just 19 million Nigerians paid into federal or state coffers – less than 30% of the eligible population. However, as of last week, this is set to change, with tax chiefs in the country announcing that they will begin implementing their first information exchange under the Common Reporting Standard (CRS). Contractors should be aware of the changing situation in the country as Nigerian contractor compliance is likely to get far more complex as a result.
Nigerian contractor compliance: what do you need to know?
In order to cut down on massive revenue losses to fraud and evasion, Executive Chairman of the Federal Inland Revenue Service, Tunde Fowler, has stated that from 2020 Nigeria would implement the first Automatic Exchange of Information. This was announced at a meeting of over 50 global tax experts in the country’s capital, Abuja, to discuss ways to combat offshore tax evasion.
Mr Fowler recognised that an increase in mobility of income and assets had created a challenge for tax administrations, and collaboration was needed to meet that challenge. He also reaffirmed the country’s general commitment to improve transparency in tax administration, increase tax revenue, and enhance service delivery.
Fowler stated: “Nigeria has demonstrated her commitment to improve transparency around tax matters. Furthermore, to facilitate the process of implementing the Automatic Exchange of Financial Account Information under the Common Reporting Standard, Nigeria has published the AEOI regulations in the Official Gazette of the Federation. Nigeria has done this to enable us to successfully conduct the first exchange of information by September 2020.”
One of many steps
However, this isn’t the only step taken by authorities that could affect Nigerian contractor compliance. Earlier this year, we wrote about a tax amnesty scheme in the country, whereby, for the next 12 months, companies holding offshore assets that haven’t paid tax can declare assets and income with a one-time payment of 35% asset value, with full immunity from prosecution. As a result of this amnesty, Nigeria’s government has recovered around $98 million.
Nigerian contractor compliance – What do you need to know?
If any contingent workers are thinking of making the move to this West African superpower, they will have to be aware of a few general nuances around Nigerian contractor compliance.
Work Permits & Visas in Nigeria
Temporary employment visas can be applied for in Nigeria directly to the Comptroller-General of the Immigration Service by companies and organisations responsible for bringing in expatriates. A work permit approximately costs $5,000. Contractors will also need to obtain a Taxpayer Identification Number (TIN), a unique 14-digit sequential number which is mandatory for all taxpayers, obtainable from a local tax office in Nigeria
Contractors should be aware
Ultimately, it’s clear that preventing tax evasion is a priority of authorities globally, and resources are being poured into tackling wrongdoing. While Nigerian contractor compliance is getting more complex, the same can be said across the world.
Contractors must be diligent when complying with an exceedingly intricate system, and just one mistake could have serious ramifications. To prevent this from happening, it is wise to employ an expert in international contractor tax and compliance to help your team achieve its goals.
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