October 23, 2019
The Federal Inland Revenue Service (FIRS) has issued a Public Notice notifying the general public of the establishment of a Non-Resident Persons’ Tax Office (NRPTO). The Public Notice directs all non-resident persons liable to tax in Nigeria to submit every return, correspondence or enquiry relating to all the taxes administered by the FIRS to the NRPTO effective 1 January 2020.
The Public Notice identifies a non-resident person as a foreign company that makes profit in Nigeria as defined in the Companies Income Tax Act (CITA) or an individual who is resident outside Nigeria and derives income or profit from Nigeria as defined in the Personal Income Tax Act (PITA).
According to the Public Notice, the FIRS has identified non-resident taxpayers as a very important segment of the tax paying public for the purpose of devoting special attention to them. This is to enhance tax certainty, promote voluntary compliance, reduce tax disputes and avoid incidence of double taxation.
The Public Notice also specifies that the NRPTO is located within the International Tax Department in the FIRS Building at Awolowo Road, Ikoyi, Lagos and states that all tax files of non-resident persons shall be domiciled at the NRPTO from 1 January 2020.
The establishment of the NRPTO by the FIRS is a progressive step towards ensuring efficiency and effectiveness in tax administration with respect to non-resident persons. Given that Section 54 of the Companies and Allied Matters Act requires foreign companies to be incorporated in Nigeria before carrying on business in Nigeria, the establishment of the NRPTO might be an avenue for the Corporate Affairs Commission (CAC) to liaise with the NRPTO to ensure that foreign companies who need to register with the CAC are encouraged to do the needful.
Furthermore, the operation of the NRPTO is expected to increase compliance convenience for non-resident persons given that the NRPTO will provide a platform for harmonization and uniformity of tax administration for non-resident persons. The FIRS may, going forward, also leverage the resources of the special tax office to address the challenges of taxing non-resident entities whose businesses are built on digital business models that have little or no physical presence.
In view of the above, non-resident persons are encouraged to seek appropriate professional support in complying with the new administrative directive.