By a Public Notice issued a few days ago, the FIRS informed all non-resident persons operating in Nigeria and the general public about the establishment of a Non- Resident Persons’ Tax Office (NRPTO). The NRPTO is to handle the tax affairs and to keep the tax files of all non-resident individuals and corporate entities.
The Public Notice further directs that starting from 1 January 2020, all non-resident persons liable to tax in Nigeria shall submit every return, correspondence or enquiry relating to all the taxes administered by the FIRS to the NRPTO located within the International Tax Department on the 3rd floor of the FIRS Building at 17 Awolowo Road, Ikoyi, Lagos.
This Public Notice was necessitated upon findings of the FIRS that non-resident taxpayers are a very important segment of the tax-paying public, most worthy of special attention. The FIRS through this Public Notice also aims to enhance tax certainty, promote voluntary compliance, reduce tax disputes and avoid incidences of double taxation.
Any person (company or individual) who makes income or profit from Nigeria and is not resident in Nigeria is a ‘non-resident person’ for the purpose of this Public Notice.
Anyone (whether in the abroad or in Naija) who derives income or profit from Nigeria must pay tax on such income or profit. Establishing the NRPTO shows that FIRS is ready to stay woke so that these monies being made by non-resident persons will not pass it by. This is a step in the right direction as it creates a tax authority ‘fixed base’ for centralized and more efficient administration of taxes with regards non-resident persons.
There are some salient issues that hinder the effective taxation/administration of non-resident persons in Nigeria. They include: (i) inability to ascertain non-resident persons physical fixed base; (ii) inability to adeptly track virtual transactions involving non-resident persons; (iii) failure of non-resident persons/contracting parties to withhold or remit required taxes; and (iv) unwillingness of non-resident persons to be duly incorporated/registered with the relevant authorities as required by law.
It thus remains to be seen if the devotion of NRPTO to serve non-resident persons will lead to the speedy resolution of such issues and increased levels of compliance.