The Federal Inland Revenue Service (FIRS) in exercise of powers conferred on it by Section 61 of the Federal Inland Revenue Service (Establishment) Act No.13 of 2007, and all other powers enabling it, has issued the Income Tax (Country by Country Reporting) Regulations, 2018 (the CbCR Regulations).
The CbCR Regulations take effect from 1 January 2018, and form part of the enhanced tax disclosure requirements set out by Action 13 of the Base Erosion and Profit Shifting (BEPS) project. The Regulations aim at providing tax authorities with improved information to enable them better assess international tax avoidance risks.
Under the CbCR Regulations, where the Ultimate Parent Entity (UPE) or a Constituent Entity (CE) of a Multinational Enterprise Group (MNE Group) is tax resident in Nigeria, such Nigerian resident entity will be required to file a Country-by-Country Report (CbC Report) with FIRS for an accounting year where the Group has a total consolidated revenue of ₦160,000,000,000 or more in the immediate preceding accounting year.
The CbC Report is expected to contain the following information:
Other highlights of the CbCR Regulations are as follows:
With the issuance of the CbCR Regulations by FIRS, companies in an MNE Group structure must take strategic measures to ensure full compliance given that the cost of non-compliance is very significant. Companies may also consider carrying out Transfer Pricing (TP) diagnostic reviews to evaluate and obviate any attendant tax and TP risks that may arise from the application of the CbCR Regulations by FIRS.