The Court of Appeal has overruled the decision of the Federal High Court (“FHC”) in Stanbic IBTC Holdings Plc (“Stanbic”) vs Financial Reporting Council of Nigeria (FRCN) & Anor (2015), which declared that failure to get approval from NOTAP for the registration of a contract made the contract illegitimate and invalid. Hence, Stanbic could not…
June is one of the busiest tax filing seasons in Nigeria. It is the deadline for filing companies income tax (CIT) returns for taxpayers with financial year-end of 31 December. For companies with connected persons, it also the deadline for filing the Transfer Pricing (TP) returns. Specifically, the due date for filing the CIT and…
In Nigeria, the government generates revenue from the taxation of individuals and businesses. Nevertheless, the Federal Government of Nigeria may exempt a business from corporate income tax for a specific period. This type of tax exemption is known as a Pioneer Status Incentive (PSI). The Nigerian Investment Promotion Commission (NIPC) administers the pioneer status incentive….
New companies in Nigeria are expected to file their first set of tax returns in line with the commencement rule. However, the Finance Act (2019) has changed the tax narrative. New companies, with effect from 13 January 2020, can now file their corporate tax returns on a preceding year basis. At this point, you must…
In financial accounting, net profit arises when revenue is greater than the cost otherwise it is a loss. The equation is different when it comes to assessable profit. Assessable profit is the profits from all sources in the year immediately before the year of assessment except in abnormal cases. Abnormal cases are when the basis…
Capital allowance is an allowance granted for income tax purposes instead of depreciation. It reduces the taxable profits and tax liability of a business. However, a taxpayer in Nigeria must fulfill four (4) conditions so as to claim capital allowance in a year of assessment. One of these conditions is that a taxpayer must get…
The going concern principle states that an entity will continue operations in perpetuity. In other words, the entity will not stop operations or liquidate its assets in the short term. Still, certain factors could force a company to stop operations. Constant losses, unfavorable government policy, fall in share price, insolvency, bankruptcy, and dormancy are common examples….
Businesses often buy items that will generate benefits above 12 months. When these items are also tangible and hard to convert into cash, they are called fixed assets. Each company is free to set a threshold for recognizing fixed assets in its books. A blue-chip company listed on the Nigerian Stock Exchange (NSE) may recognise…
New and existing businesses in Nigeria are saddled with two or more statutory requirements. This article focuses on taxation of profits of new companies. In Nigeria, this concept is called commencement rule based on Section 29(3) of the Companies Income Tax Act 2007, LFN (as amended). This provision applies to companies in the first…