The Federal Inland Revenue Service (FIRS) has started to enforce compliance with the Income Tax (Country-by-Country Reporting) Regulations (2018) in Nigeria. Under the Country-by-Country Reporting (CbCR) Regulations, multinational enterprises (MNEs) should provide the total details of income, tax paid, and economic activity in tax jurisdictions where the MNE conducts business. MNEs are also required to file an annual CbCR to FIRS in the prescribed format. This information will assist the Nigerian tax authority in performing an advanced transfer pricing (TP) risk assessment.
The criteria for determining if a company should prepare and file an annual Country-by-Country report to the FIRS are:
1. a Nigerian company or tax resident in Nigeria;
2. a member of an MNE group and the group’s gross revenue is one hundred and sixty billion Naira (NGN 160 billion) and above in the accounting year immediately preceding the year of assessment; and
3. the parent company of the MNE Group (“Ultimate Parent Entity”) or nominated by the MNE Group to file on behalf of the Group (“Surrogate Parent Entity”) or handles the local filing of the country-by-country report in Nigeria
The due date for submitting this notification to FIRS is 12 months after the end of the relevant accounting year of the MNE group. However, FIRS may consider a valid request from a taxpayer for the extension of time for compliance with a notice. For companies with 31 December accounting year-end of the MNE group, the filing deadline was 31 December 2018. Failure to file this notification attracts a flat penalty of ₦5 million plus ₦10,000 for each day of default.
Some companies have already gotten letters from the FIRS imposing the penalties for non-compliance with the CbCR regulations. Taxpayers who have not complied until now may do so immediately to reduce additional penalties.