The Federal Inland Revenue Service (FIRS) has started issuing demand letters for payment of administrative penalties to taxpayers who did not file Country-by-Country Reporting (CbCR) notification forms with FIRS under Regulation 6(1) of the Income Tax (Country-by-Country Reporting) Regulations 2018 (the CbCR Regulations).
The CbCR Regulations, which were released in June 2018 with a commencement date of 1 January 2018, require corporate taxpayers (who are tax-resident in Nigeria and are members of Multinational Enterprises [MNEs]) to file a CbCR notification with FIRS no later than 31 December 2018 if the Reporting Accounting Year end of such MNE Group is 31 December. Please see our publication in this regard.
CbCR Regulations impose an administrative penalty of ₦5,000,000 in the first instance of failure to file the notification, and an additional ₦10,000 for each day the default continues.
The pattern of issuance of the demand letters appears to indicate FIRS is not distinguishing between taxpayers that are members of MNE Groups and those that are not. It also does make a distinction between taxpayers that are members of excluded MNE Groups and those that are not.
The definition of ‘MNE Group’ in the CbCR Regulations excludes group of companies operating only within one tax jurisdiction/country. It also excludes group of companies with total consolidated group revenue less than N160 billion in any particular accounting year.
Relevant stakeholders need to analyse these provisions critically with a view to knowing how they are affected.