By Modupe Gbadeyanka
The Federal Inland Revenue Service (FIRS) has said it would not hesitate to fine any financial institution operating in Nigeria which fails to adhere strictly to the new Income Tax (Income Reporting Standard) Regulations 2019.
The guidelines were recently released by the agency and it was stated that the first reporting year would commence from 2019 calendar year, with the filing deadline for information return fixed for May 31, 2020.
The CRS Regulations and the various agreements signed by the FIRS, will allow it to receive specified information on the bank accounts held by Nigerian tax residents in up to 105 countries. In exchange, the FIRS will be obligated to provide similar information to others on the CRS countries list.
According to the CRS Regulations, which became effective on Monday, July 1, 2019, qualifying Nigerian Financial Institutions are required to submit an electronic information return (i.e. a return that reports specified financial account information of certain persons) to the FIRS on an annual basis.
For any financial firm that fails to comply with duty or obligation imposed by the CRS Regulations, it would be forced to pay a fine of N10 million in the first instance in addition to N1 million/month.
In addition, any financial institution that files false or incorrect information would pay N5 million fine and failure to comply with the FIRS’ requirement in the exercise of its powers would receive N1 million fine in the first instance in addition to N100,000/month.
Also, failure by financial institution to keep records in accordance with the regulations would attract N1 million sanction in the first instance in addition to N100,000/month.
Business Post reports that the regulations give effect to the provisions of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters (MAC), the Multilateral Competent Authority Agreement (MCAA) on Automatic Exchange of Financial Account Information and the Common Reporting Standard (CRS), alongside its commentaries, as approved by the Council of the Organisation for Economic Co-operation and Development (OECD).
The regulations apply primarily to all Nigerian Financial Institutions, excluding government entities, international organisations, central banks and any other entity that presents a low risk of being used to evade tax and is defined in the domestic law as a Non-reporting Financial Institution.
