Implications of Country by Country Reporting Regulations for Multinational Enterprises in Nigeria
July 4, 2018
On 19 June 2018, the Federal Inland Revenue Service (FIRS) released the much-anticipated Income Tax (Country by Country Reporting) Regulations, 2018 (the Regulations) which was published in the official gazette dated 8 January 2018.
The objectives of the Regulations are to provide tax authorities with information about MNEs’ global activities, profits and taxes; provide the FIRS with information to better assess international tax avoidance risks; improve transparency in the tax practices of the MNEs and prevent tax evasion or avoidance through Base Erosion and Profit Shifting (BEPS).
This article reviews the provisions of the Regulations, highlights the compliance requirements as well as implications to taxpayers who are members of Multinational Enterprises (MNEs). It also reviews some of the implications foreseen in our earlier article published in the Business Day newspaper dated 13 February 2018.
Highlights of the Regulations
Some of the key provisions of the Regulations include:
- Each Ultimate Parent Entity (UPE) of an MNE Group having Consolidated Group Revenue (CGR) of ₦160 Billion (equivalent of €380 Million) or above is required to file a Country-by-Country (CbyC) Report in a specified format with the FIRS on an annual basis, provided that such UPE is resident in Nigeria for tax purposes. The CbyC Report shall be filed not later than 12 months after the last day of the Reporting Accounting Year of the MNE Group. For example, a Group with a 31 December year end will be required to file its first CbyC Report on or before 31 December 2019 with respect to its economic activities in 2018 Financial Year.
- A Constituent Entity which is not the UPE of an MNE Group that meets the following conditions will also be required to file a CbyC Report with the FIRS within the time specified:
• the Constituent Entity is resident in Nigeria for tax purposes and
• one or more of the following conditions apply:
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