Nigeria Tax Regime Changes and Implications

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1 Nigeria Tax Regime Changes and Implications Presentation at Lagos Business School Breakfast Club By Yomi Olugbenro Partner & West Africa Tax Leader Deloitte 6 September 2017

Agenda State of the Nation Revenue drive through taxation Implications for taxpayers 2017.

2 Agenda State of the Nation Revenue drive through taxation Implications for taxpayers For information, contact Akintola Williams Deloitte. All rights reserved. Nigeria Tax Regime: Changes and Implications 2

Nigeria Budget 2017 How much is available for? 3.2 LG 19% Outlay Capital Revenue Financing 6.5 SG V 7.4 FG 43% N17t $56b R1.

18trn ~30% share, increase of 37% year on year in NGN. Decrease of 11% in USD N5.08trn Deficit- N2.36 trn. Deficit equals 2.

5t) will barely cover recurrent (~N3t) Source: FG & SG Appropriation Bills, NOS, Newspapers; BudgIT Research Projections N1.

4 Nigeria Budget 2017 How much is available for? 3.2 LG 19% Outlay Capital Revenue Financing 6.5 SG V 7.4 FG 43% N17t $56b R1.6t $120b N7.44trn increase of 23% over PY in NGN terms. Decrease of 26% in USD ($30b v $26b) N2.18trn ~30% share, increase of 37% year on year in NGN. Decrease of 11% in USD N5.08trn Deficit- N2.36 trn. Deficit equals 2.18% of GDP (2.16% in PY) Total projected revenue excluding independent & deficit financing (N3.5t) will barely cover recurrent (~N3t) Source: FG & SG Appropriation Bills, NOS, Newspapers; BudgIT Research Projections N1.84trn for debt servicing, Local - N1.49; Foreign-N0.175 S/Fund-N0.178 Debt servicing = 25% of spending (36% of revenue!) For information, contact Akintola Williams Deloitte. All rights reserved. Nigeria Tax Regime: Changes and Implications 4

State of the Nation A cry for alternative revenue sourcing?

11tr FIRS revenue for 2016 (N trillion) Actual, 3.303 Deficit, 1.

5 State of the Nation A cry for alternative revenue sourcing? Indicator 2017 Full year budget 2017 Q1 budget 2017 Q1 actual Variance Revenue (NGN trillion) % FIRS revenue for 2017 as at July Target N4.94tr YTD July N2.11tr FIRS revenue for 2016 (N trillion) Actual, Deficit, For information, contact Akintola Williams Deloitte. All rights reserved Nigeria Tax Regime: Changes and Implications 5

Revenue drive through taxation Tax to the rescue We should not allow ourselves to be discouraged by those who say we can't find the money to fund the spending required to implement this budget.

7 Revenue drive through taxation Tax to the rescue We should not allow ourselves to be discouraged by those who say we can't find the money to fund the spending required to implement this budget. We must, and we can, find the resources. We will challenge our revenue generating agencies, particularly the FIRS and Customs to improve their efficiencies and broaden their reach so as to achieve the targets set for them in the 2017 Budget. They must be tasked to leverage technology to drive revenue collection. Senator Udo Udoma For information, contact Akintola Williams Deloitte. All rights reserved Nigeria Tax Regime: Changes and Implications 7

8 Revenue drive through taxation Key developments Revised National Tax Policy (NTP) Voluntary Asset and Income Declaration Scheme (VAIDS) Registration & enforcement measures, new collection mechanism Loophole watching, New multilateral agreements For information, contact Akintola Williams Deloitte. All rights reserved Nigeria Tax Regime: Changes and Implications 8

9 Revenue-drive through taxation Key developments Objectives of the NTP First issued in Revised NTP approved by FEC on 1 Feb 2017 Provide clarity on the roles and responsibilities of Stakeholders For information, contact Akintola Williams Deloitte. All rights reserved Nigeria Tax Regime: Changes and Implications 9

Revenue drive through taxation Key developments VAIDS VAIDS is an elaborate tax amnesty scheme Rationale /Driver Shortage of government revenue Whose initiative Ministry of

9 months Benefits Exemption of 10% penalty and 19% penalty plus lenient payment terms Application of procedure Voluntary declaration, subject to verification Consequences

10 Revenue drive through taxation Key developments VAIDS VAIDS is an elaborate tax amnesty scheme Rationale /Driver Shortage of government revenue Whose initiative Ministry of Finance Scope 6 years ( ) All taxes applicable to individuals and corporates Key objective Grow tax/gdp ration above 6% Generate $1billion in tax revenues Timeframe 9 months Benefits Exemption of 10% penalty and 19% penalty plus lenient payment terms Application of procedure Voluntary declaration, subject to verification Consequences of noncompliance Prosecution + Name and shame For information, contact Akintola Williams Deloitte. All rights reserved Nigeria Tax Regime: Changes and Implications 10

11 Revenue drive through taxation Key developments New Multilateral agreements The Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI) Multilateral agreements The Common Reporting Standard Multilateral Competent Authority Agreement (CRSMCAA) For information, contact Akintola Williams Deloitte. All rights reserved Nigeria Tax Regime: Changes and Implications 11

12 Revenue drive through taxation Key developments Stricter enforcement efforts Revenue pressure Increased aggression Raising of best of judgment assessments Intelligence and collaboration Increased inter-agency cooperation Enforcement drive: Review of tax status for companies engaged in government contracts Increased interest rate on unpaid taxes Taxpayers registration drive: Leverage existing databases Presumptive income tax Technology & Innovation: Installation of data capturing devices on taxpayers ERP Systems Carrot and stick Whistleblowing Non-compliance sticker Naming and shaming E-tax, ITAS For information, contact Akintola Williams Deloitte. All rights reserved Nigeria Tax Regime: Changes and Implications 12

14 Implications for taxpayers Where do we go from here? Increased revenue drive by government means more tax headache in terms of cost and compliance for taxpayers. Understand the times. There are no easy ways out of our current economic challenges Focus on the future Proactivity pays. Optimize benefits available from current regulations ((VAIDS, tax holiday, ETLS, etc) Identify areas of non-compliance with tax obligations and take steps for remedial action Be strategic to ensure tax optimization. A holistic approach to tax risk management is critical For information, contact Akintola Williams Deloitte. All rights reserved Nigeria Tax Regime: Changes and Implications 14

Thank you Contributions, comments and questions? 2017.

Olugbenro is an alumnus of The University of Manchester (UK) and Fellow of both the Institute of Chartered Accountants of Nigeria (ICAN) and the Chartered Institute of Taxation of

Olugbenro qualified as a Chartered Accountant in 1997 as a part-3 Undergraduate of Accounting and has gathered a broad range of experience, cutting across various industries and

He has extensive experience in various specialized tax projects including business tax, employment tax international tax, transfer pricing, transaction tax, tax dispute resolution,

16 About the speaker Profile of Yomi Olugbenro Yomi Olugbenro is a Partner and the West Africa Tax Leader at Deloitte. He is a member of Deloitte West Africa Executive Committee. Yomi Olugbenro, FCA, FCTI Lead Tax Partner Deloitte West YomiOlugbenro YomiOlugbenro yomilugbenro.com Mr. Olugbenro is an alumnus of The University of Manchester (UK) and Fellow of both the Institute of Chartered Accountants of Nigeria (ICAN) and the Chartered Institute of Taxation of Nigeria (CITN). He is the Vice Dean of the Board of Indirect Tax Faculty of CITN and a Member of the Board of Tax & Fiscal Policy Faculty of ICAN. Mr. Olugbenro qualified as a Chartered Accountant in 1997 as a part-3 Undergraduate of Accounting and has gathered a broad range of experience, cutting across various industries and expertise in his nearly 20 years of post-qualification experience. He has distinguished himself as a seasoned advisor on tax and fiscal policy issues. He has extensive experience in various specialized tax projects including business tax, employment tax international tax, transfer pricing, transaction tax, tax dispute resolution, tax strategy and risks, tax structuring and optimisation strategies. He is a regular speaker on tax and fiscal policy issues and has facilitated several trainings within and outside the country For information, contact Akintola Williams Deloitte. All rights reserved. Nigeria Tax Regime: Changes and Implications 16

17 It is understood that this session is aimed at sharing general knowledge and presenting the speaker s perspectives about the subject. No representation or warranty (express or implied) is given as to the completeness or accuracy of the information contained in this document. The views expressed in this presentation are those of the speaker, and are based on available facts, publicly available information and personal judgement as at the time of this seminar. The views expressed herein do not in any way represent the views of the author s employer/firm, the organiser of this seminar or relevant regulatory authorities. This presentation or seminar should not be used as a binding opinion neither should they be relied upon as basis for taking personal or business decision without obtaining specific professional advice and guidance. The author does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this presentation or for any decision based on it For information, contact Akintola Williams Deloitte. All rights reserved Nigeria Tax Regime: Changes and Implications 17

18 Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee ( DTTL ), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as Deloitte Global ) does not provide services to clients. Please see for a more detailed description of DTTL and its member firms. Akintola Williams Deloitte, a member firm of Deloitte Touche Tohmatsu Limited, is a professional services organization that provides audit, tax, consulting, business process solutions, financial advisory, and risk advisory services. Deloitte provides audit, consulting, financial advisory, risk advisory, tax and related services to public and private clients spanning multiple industries. Deloitte serves four out of five Fortune Global 500 companies through a globally connected network of member firms in more than 150 countries and territories bringing world-class capabilities, insights, and high-quality service to address clients most complex business challenges. To learn more about how Deloitte s approximately 245,000 professionals make an impact that matters, please connect with us on Facebook, LinkedIn, or Twitter For information, contact Akintola Williams Deloitte. All rights reserved.

Automatic Exchange of Information Implications for Nigeria. Yomi Olugbenro Partner & West Africa Tax Leader Deloitte & Nigeria)i

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