Visas and Entry Of Foreign Workers

of Internal Affairs. While the Immigration Act of 1963 is the main piece of legislation governing the entry of foreigners into Nigeria, other international protocols and bilateral agreements also apply as in the case of ECOWAS where nationals are not subject to the residence permit processes. The Act provides for both short-term business visas and longer-term work and residence permits for foreigners provided certain preconditions are met. Nigerian Visas are obtained in the Countries where applicants are domiciled or the nearest Nigerian Mission nearest to their Countries of residence.

Categories of Visas Available to Expatriates Desirous of Traveling To Nigeria For Various Reasons & Purposes.

TAXATION

Nigeria’s federal structure provides for the allocation of taxation at each tier of government [i.e., the Federal, State, and Local Government levels]. Corporate income, education tax, withholding taxes corporate institutions, oil and gas production taxes, value-added tax [VAT], and import duties are imposed by the Federal Government. Personal income tax, withholding taxes [individuals), stamp duties, road, and gaming taxes are collected by State Governments Local Government collects social and commercial permit levies fees and charges.

CORPORATE TAXATION

Taxation of corporations is provided for under the Companies Income Tax Act. While Nigerian companies are taxed on their worldwide income, foreign companies are liable only as regards the portion of their profit attributable to businesses carried out in Nigeria. The corporate income tax in Nigeria for non-oil and gas companies is 30%, with the following allowances:

• Annual capital allowances (10% on buildings, 25% on plant, 20% on furniture and fittings) supplemented by substantial initial year allowances, with agriculture and mining activities having especially favorable initial test allowances. The deduction of capital allowances is capped at two-thirds of annual assessable profits (except for agricultural activities) and the total allowance is limited to 95% of the asset cost.
• Additional investment allowances (reconstruction investment allowance) of 10% are allowable on all plants and equipment.

TRANSACTION TAXES

The range of transaction taxes that apply to business enterprises in Nigeria are as follows:

• Value Added Tax [VAT] of 5% is charged as a consumption tax on the supply of goods and services. Exempt goods and services include basic foodstuffs, medicines, medical devices and medical services, educational materials, and exported goods and services. Some items are zero-rated.
• The education tax rate of 2% is payable by all resident companies.
• The Petroleum Profits Tax (PPTA) Act of 2007 also provides for the taxation of companies involved in the exploration and extraction of petroleum. Under the Act, the tax regime for exploration and production companies is set at 85%, a lower rate of 67.75% is applicable until the amortization of pre-production expenses, and a rate of 50% is applied to Production Sharing Contracts (PSCs).
• Capital Gains Tax of 10% is levied on the disposal of property, while the sale of shares and stocks is exempt. Non-residents are subject to the capital gains in Nigeria only on the disposal of fixed property. held directly or indirectly, located in Nigeria.
• Stamp Duties are charged by both Federal and State Governments on various commercial and legal documents, such as transfers of deeds, insurance policies, and bills of exchange.
• Withholding Tax is applicable on specified transactions and at specific rates depending on the beneficiary of the payment.

PERSONAL INCOME TAX

Liability to Personal Income Tax does not depend on the domicile or nationality of the taxpayer. Income arising from a trade, business, or profession inside or outside Nigeria is liable for income tax in Nigeria if the taxpayer is a Nigerian citizen. Foreign residents are equally liable in Nigeria if their Income originates from activities in Nigeria. The applicable rates are as follows:

• Personal Income Tax rates are progressive up to 24%.
• 1% of annual payroll to be paid to the Industrial Training Fund (with 60% reimbursable upon verification of performance in staff training).
• For social security, an employee must contribute a minimum of 7.5% of earnings, while the employer must make a pension contribution at a minimum of 7.5% of the employee’s basic salary, transport, and accommodation allowance.

In Yobe State, the Board of Internal Revenue empowers the State Internal Revenue Service (IRS) to be responsible for the collection and administration of personal income tax in the State.

Generally, reforms in Nigeria on taxation are tending towards increasing indirect taxes and at the same time reducing direct taxes for better efficiencies. Even though the Yobe State Government is taking proactive measures to increase the efficiency of its internal revenue generation mechanisms as well as raise the level of the collection, this is being done within the context of extant Federal Laws and the purview of the Joint Tax Board which generally regulates tax matters.

DOUBLE TAXATION AGREEMENTS (DTAS)

Double Taxation Agreements (DTA) are treaties between two or more countries to avoid international double taxation of income and property. The main purpose of DTA is to divide the right of taxation between the contracting countries, to avoid differences, to ensure taxpayers’ equal rights and security, and to prevent evasion of taxation. Double taxation occurs when the same transaction or income source is subject to two or more taxing authorities. This can occur within a single country when independent governmental units have the power to tax a single transaction or source of income or may result when different sovereign states impose separate taxes, in which case it is called international double taxation.

The source of the double taxation problem is that the taxing jurisdictions do not follow a common principle of taxation. One taxing jurisdiction might tax income at its source, while others will tax income based on the residence or nationality of the recipient. Indeed, a jurisdiction might use all three of these basic approaches in imposing taxes. Nigeria currently has DTAS with the following countries, namely: Belgium, Canada, China, Czech Republic, France, the Netherlands, Pakistan, Philippines, Romania, Singapore, Slovakia, South Africa, Spain, Sweden, the United Kingdom, and Italy. All the treaties are comprehensive except the treaty with Italy which covers Air and shipping agreements only. Agreements with Turkey Russia, India, Korea, and Sweden are awaiting ratification.

Tax Exemptions

In Nigeria, certain types of income are exempt from income tax. Exempt income includes:

• The profits of any company engaged in ecclesiastical, charitable, or educational activities of a public character in so far as such profits are not derived from a trade or business carried on by such company; and
• The profits of any company formed for the purpose of promoting sporting activities where such profits are wholly expendable for such purpose.

Nigerian not-for-profit companies may also apply to the President for an order exempting them from all or any profits from any source.

The Federal Inland Revenue Service [FIRS] recently issued guidelines stating that all NGOs are expected to register with the nearest Integrated Tax Office [ITO] of FIRS with the following documents:

• A copy of the registration certificate issued by the Corporate Affairs Commission [CAC].
• Certified copy of Memorandum or Constitution, Rules and Regulations governing the NGO
• List and Profiles of the Trustees/Board Members nominated; one of the Trustees/Board members must be a serving government official from the relevant MDA responsible for the activity of the NGO.
• Copy of the current Tax Clearance Certificate [TCC] of each of the Trustees.