Expert Seeks Improved Tax Compliance by Non-resident Individuals & Companies

Foreigners who are employers and employees in Nigeria have been advised to ensure full disclosure in their tax payment.


Deputy Director, Lagos State Internal Revenue Service (LIRS), Mr. Bicci Alli, stated this in report titled: “Taxation of Expatriates, Non Resident Individuals and Corporation,” presented in Lagos recently.


He identified some issues and challenges tax official experience with employers of foreign nationals to include non-remittance, under- remittance and late remittance of PAYE and other taxes; deliberately under-taxing employees’ income through the design and implementation of various schemes aimed at tax evasion; refund of tax paid - tax on tax; non-disclosure of offshore income arising from the Nigerian employment and acquisition of fixed assets in the names of the employees.


Others, according to him, include abuse of the Nigerian court process by obtaining court order restraining enforcement of warrant of restrain based on spurious reasons; amongst others.


He stressed that every adult – foreign or Nigerian- is chargeable to tax in Nigeria depending on his residency status and income. According to the LIRS senior official, residency in Nigeria is determined in terms of physical presence in the country and not by nationality.


Therefore, for tax purposes an individual who is physically present in Nigeria for a minimum of an aggregate of 183 days or six months in a calendar year is regarded as a Nigerian resident. But a non- resident individual is liable to tax only on the income from his investment(s) in Nigeria.


“In line with Section 3 (1)(b) of PITA 1993 , taxable income of an employee includes any salary, wage, fee, allowance or gains or profit from employment including compensation, bonuses, premiums, benefits or other perquisites allowed or given or granted by any person to an employee.


“With the amendments to Personal Income Tax Act (PITA), 2011, the total emoluments of an employee is taxable irrespective of the manner the component is classified.


He pointed out that a non-resident becomes liable to tax from the day he commences to carry on trade or business in Nigeria. He only becomes liable to tax on employment income when he becomes resident.

Also, for a non-resident company, which are companies not registered or incorporated in Nigeria but derived income from Nigeria, he noted that the fact that a company had been exempted from incorporation does not mean exemption from Nigeria’s income tax payment.


“Whether or not a company is resident, it shall be subject to tax in Nigeria on the income derived from Nigeria. Taxation of non-residents is governed by domestic tax legislation and treaty provisions.


“Having known who are considered as non-resident individuals and corporations/companies, it will be pertinent to know under what sections of the domestic legislation that the non-residents are liable to tax,” Alli added.

Culled from This Day