The Minister of Industry, Trade, and Investment has issued the Industrial Inspectorate Regulations 2022 (Regulations). The Regulations show the application and collection fees for an acceptance certificate in Nigeria. Where a company does not meet the rule, FIRS may remove the capital allowances claimed for a year of assessment. This step can lead to additional…
The Federal Inland Revenue Service (FIRS) has released a public notice on the submission of a certificate of acceptance. Section 3 of the Industrial Inspectorate Act, Cap. I8, LFN 2004 (as amended), provides that any person incurring Qualifying Capital Expenditure (QCE) of NGN500,000 and above must obtain a Certificate of Acceptance from the Industrial Inspectorate…
In financial accounting, a business can depreciate its fixed assets with a straight-line method or reducing balance method or units of production. However, the principle is different for calculating the capital allowance. All taxpayers must use the same rate. Schedule II of the Companies Income Tax Act 2004 contains the capital allowance rates in Nigeria…
Our previous article discussed the theory of capital allowance in Nigeria. Now, we shall consider four (4) examples on how to calculate capital allowance in Nigeria. Question 1: In January 2022, Company Bee bought plant and machinery for NGN 5,000,000. The financial year of Company Bee ends on 31 December. Calculate the capital allowance….
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…
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…