April 19, 2018
President Muhammadu Buhari has given his assent to Nigeria’s Double Tax Agreement (DTA) with Singapore and a Memorandum of Understanding (MoU) with Switzerland and the International Development Association (IDA). This assent was given on 26 March 2018 after the DTA and the MoU were approved by the Federal Executive Council. There was no formal ratification of the agreements by the National Assembly.
In August 2017, Nigeria signed a “DTA with the Republic of Singapore for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and Capital Gains”. The DTA clarifies the taxing rights of both countries on income arising from cross-border transactions between Nigeria and Singapore and also reduces the incidence of double taxation on such income.
Nigeria also signed a tripartite “MoU with the Swiss Federal Council and the International Development Association for the Return, Monitoring and Management of Illegally Acquired Assets Confiscated by Switzerland and to be Restituted to the Federal Republic of Nigeria”. The MoU is in line with Switzerland’s policy on returning illegally acquired assets and provides for the disbursement of returned funds in tranches. The MoU also sets out measures to be taken in the event of corruption and misuse of returned funds.
Nigeria has witnessed an increase in international tax co-operation with the signing of a number of multilateral and bilateral tax treaties such as the DTAs with the United Arab Emirates and the State of Qatar which were both signed within the last two years. Generally, these treaties only become effective after a formal process is carried out by each signatory country to a DTA. In Nigeria, a ratification by the National Assembly followed by an assent or approval by the President is required.
With respect to the DTA with Singapore, the ratification by the National Assembly seems to have been dispensed with, in spite of the provisions of Section 12 of the 1999 Constitution that “No treaty between the Federation and any other country shall have the force of law except to the extent to which any such treaty has been enacted into law by the National Assembly”. Therefore, the legal status of the DTA remains uncertain given that the due process required to make it effective under Nigerian law was not followed, notwithstanding the President’s assent.
It is important for potential investors and taxpayers to track developments in this regard and obtain relevant professional advice on the implications of the DTA on investments that may be impacted thereby.