Common Reporting Standard Compliance in Nigeria: What next to consider?

Common Reporting Standard Compliance in Nigeria: What next to consider?

This article was published in The Guardian Newspaper on 19 May 2021. Below is an excerpt from the article.

Overview of Common Reporting Standard

As taxpayers approach another Automatic Exchange of Information (AEOI) – Common Reporting Standard (CRS) returns filing season, financial institutions in Nigeria would need to take note of their CRS reporting obligations as provided in the Income Tax (Common Reporting Standard) Regulations, 2019 (CRS Regulations) and the Income Tax (Common Reporting Standard) Implementation and Compliance Guidelines, 2019 (CRS Guidelines).

CRS is an information standard which provides a set of rules for the automatic exchange of financial account information relating to customers of Reporting Financial Institutions (RFIs) between tax authorities across the world. RFIs include depository institutions (such as commercial banks, savings and loan associations and credit unions), custodial institutions (e.g. custodian banks, stockbrokers), investment entities (portfolio and asset management companies) and specified insurance companies (e.g. life insurance companies). The purpose of the standard is to improve transparency, thereby making information of persons (i.e., individuals and entities) holding various investments across the world visible and available to tax authorities of relevant jurisdictions, with the ultimate aim of combating tax evasion.

On 17 August 2017, Nigeria signed the Multilateral Convention on Mutual Administrative Assistance in Tax Matters (MAC) and the Multilateral Competent Authority Agreement (MCAA) on AEOI that provides a legal framework for exchange of CRS information and in August 2019, the Federal Inland Revenue Service (FIRS) released the CRS Regulations and CRS Guidelines.

Under the CRS regime, tax authorities of relevant jurisdictions are required to obtain certain specified information from RFIs and automatically exchange such information with tax authorities of other participating jurisdictions on a yearly basis. RFIs are required to report certain categories of financial accounts that qualify as reportable accounts, such as; high-value accounts, lower value accounts, pre-existing accounts for entities, new accounts for individuals and entities and inflows (i.e., incomes/proceeds) to the tax authority in each CRS participating jurisdiction[1].

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[1] According to the OECD, over one hundred jurisdictions have adopted the CRS

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