[Nigeria] Expats must present proof of tax payment to renew permits

[Nigeria] Expats must present proof of tax payment to renew permits
19 Apr 2021

The Comptroller General of the Nigeria Immigration Service (CGNIS), Mr Muhammad Babandede, has directed that as of April 1, 2021, all expatriates - including nationals of the Economic Community of West African States - must present proof of tax payment to the Nigeria Immigration Service (NIS) to renew their resident and work permits. Proshare looks in detail at the implications of the change.

This directive is an exercise of the powers conferred on the CGNIS by Sections 37 and 39 of the Immigration Act, 2015. It means that all applications to renew residence and work permits must - in addition to other requirements - include copies of valid tax clearance certificates (TCCs), Personal Income Tax (PIT) remittance schedules and evidence of payment of PIT due before the application can be processed.

Implications

The CGNIS' decision to include submission of evidence of tax payments as part of the requirements for renewal of residence and work permits of expatriates working in Nigeria aligns with the government's wider drive for tax compliance in Nigeria.

The new directive may affect the R11 Temporary Work Permit (TWP) visa, which allows foreign nationals to reside and work in Nigeria temporarily for up to 6 months.  Although the process for the issuance of this category of visa is yet to commence at the Nigerian Missions Abroad, the NIS is expected to issue further clarification.  Meanwhile, the NIS may need to review its directive to ensure consistency with Section 10(1) of the Personal Income Tax Act (PITA), as amended, which exempts the income of an expatriate, who is employed temporarily in Nigeria (i.e., under a TWP), from tax where:

* the duties of their employment are performed on behalf of a non-resident employer and their remuneration is not charged to the fixed base of the company in Nigeria;
* the expatriate is not in Nigeria for an aggregate of 183 days or more in any twelve-month period; and
* their income is taxable in the country of his employer. 

 As a consequence, expatriates eligible for income tax exemption under Section 10(1) of the PIT Act should not be required to present evidence of tax payments when renewing their TWP.  Otherwise, the NIS will be imposing a tax obligation where none exists in the tax law.  It is hoped that the NIS will be guided accordingly.

Source: Proshare

The Comptroller General of the Nigeria Immigration Service (CGNIS), Mr Muhammad Babandede, has directed that as of April 1, 2021, all expatriates - including nationals of the Economic Community of West African States - must present proof of tax payment to the Nigeria Immigration Service (NIS) to renew their resident and work permits. Proshare looks in detail at the implications of the change.

This directive is an exercise of the powers conferred on the CGNIS by Sections 37 and 39 of the Immigration Act, 2015. It means that all applications to renew residence and work permits must - in addition to other requirements - include copies of valid tax clearance certificates (TCCs), Personal Income Tax (PIT) remittance schedules and evidence of payment of PIT due before the application can be processed.

Implications

The CGNIS' decision to include submission of evidence of tax payments as part of the requirements for renewal of residence and work permits of expatriates working in Nigeria aligns with the government's wider drive for tax compliance in Nigeria.

The new directive may affect the R11 Temporary Work Permit (TWP) visa, which allows foreign nationals to reside and work in Nigeria temporarily for up to 6 months.  Although the process for the issuance of this category of visa is yet to commence at the Nigerian Missions Abroad, the NIS is expected to issue further clarification.  Meanwhile, the NIS may need to review its directive to ensure consistency with Section 10(1) of the Personal Income Tax Act (PITA), as amended, which exempts the income of an expatriate, who is employed temporarily in Nigeria (i.e., under a TWP), from tax where:

* the duties of their employment are performed on behalf of a non-resident employer and their remuneration is not charged to the fixed base of the company in Nigeria;
* the expatriate is not in Nigeria for an aggregate of 183 days or more in any twelve-month period; and
* their income is taxable in the country of his employer. 

 As a consequence, expatriates eligible for income tax exemption under Section 10(1) of the PIT Act should not be required to present evidence of tax payments when renewing their TWP.  Otherwise, the NIS will be imposing a tax obligation where none exists in the tax law.  It is hoped that the NIS will be guided accordingly.

Source: Proshare

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