The Federal Inland Revenue Service (FIRS) has released a public notice (the Notice), notifying Nigerian branches and subsidiaries of Multinational Enterprises (MNEs) of suspension of the implementation of the local filing requirement of Country by Country (CbC) reports, until further notice.
Generally, Ultimate Parent Entities (UPE) of MNEs are required to file CbC reports in the jurisdiction where they are resident for tax purposes. The local filing requirement of CbC reports, as set out in Regulation 4 of the Income Tax (Country by Country Reporting) Regulations, 2018 (CbCR Regulations), mandates Constituent Entities (branches and subsidiaries) who are resident for tax purposes in Nigeria and meet any of the criteria stated in the CbCR Regulations, to file CbC reports in Nigeria.
In the Notice, FIRS specifically indicated that the suspension does not preclude MNEs, whose headquarters are in Nigeria or Nigerian entities appointed as Surrogate Parent Entities, from filing CbC reports as provided under the CbCR Regulations.
Nigeria is a non-reciprocal country with respect to the automatic exchange of CbC reports i.e. Nigeria is committed to sending CbC reports to other countries (with which there are exchange agreements) but will not be able to receive CbC reports from these countries. The suspension of local filing requirements follows the recommendations in the Organisation for Economic Co-operation and Development (OECD) Peer Review Report (see Deloitte’s Outlook and Impact of Changes in Nigeria Taxation Landscape for 2020). OECD had recommended that Nigeria amends its CbCR Regulations to apply local filing requirement strictly in accordance with the terms of reference, due to Nigeria’s non-reciprocal status in exchanging CbC reports.
The Notice also emphasized that all other obligations in the CbCR Regulations remain effective, including the obligation to file CbC notification forms. Taxpayers are advised to take note of all continuing obligations and comply accordingly.