What you need to know
Schedule 19 of the UK Finance Act 2016, introduced the requirement for qualifying groups to publish a Tax Strategy on their websites. The deadline for publication of the group’s Tax Strategy was before the end of the first accounting period beginning after 15 September 2016.
Nigerian groups that have UK operations (branch or subsidiaries) and annual group consolidated turnover of above N300 billion in any fiscal year after 15 September 2016 are likely to be exposed to this requirement. As the rule is a UK legislation, many Nigerian groups may be unaware of its existence. Furthermore, the relatively poor tax culture in Nigeria could mean that such Nigerian groups may have no Tax Strategy or an informal approach to managing tax risk.
The new requirement will have a considerable impact on large companies, as they are forced to engage with the public on their tax affairs and, explaining their previously private views on tax management. All at a time when their approach to tax is under immense scrutiny internally and externally.
In Nigeria, the Federal Inland Revenue Service does not have a requirement for corporates to publish a Tax Strategy, but with the increased focus on the low tax to GDP ratio, it is only a matter of time before regulators begin to initiate similar regulations. Similarly, investors from the UK may begin to consider tax governance and strategy in relation to the investments they make in other countries, including Nigeria or whether targets in Nigeria would align with their group-wide Tax Strategy.
PWC NIGERIA
