15 Jan

TAXATION OF NON-RESIDENT COMPANY (FACTS YOU NEED TO KNOW)-VOL1

Introduction

Section 105 (1) of CIT 2004 defines a Nigerian company as “any company or corporation (other than corporation sole) established by or under any law in force in Nigeria or elsewhere” while a non-residence company is “any company or corporation (other than a corporation sole) established by or under any law in force in any territory or country outside Nigeria. For income tax purposes, a person may be resident, non-resident or possesses dual residence.

The concept of residence determines the extent to which the income of a taxpayer is liable to tax under a tax jurisdiction. In Nigeria, a resident company is assessable on the global income. The profit of a Nigerian company is deemed to accrue in Nigeria regardless of the jurisdiction from which it is earned. In other words, a Nigerian company is assessed to tax on its global profits. On the other hand, in the case of a non-resident company, only the profit that is deemed to be derived from Nigeria is assessable to tax in Nigeria. Profits from any trade or business are deemed to be derived from Nigeria to the extent that the profits are attributable to that part of thecompany’s operations in Nigeria.