The controversy surrounding the new tax law, which is primarily driven by public non-comprehension of its workings, has led Nigerians to continue to raise serious questions. With a spotlight on the Nigerians and businesses in the diaspora, severe concerns have arisen from the fear of double taxation...
The controversy surrounding the new tax law, which is primarily driven by public non-comprehension of its workings, has led Nigerians to continue to raise serious questions.
With a spotlight on the Nigerians and businesses in the diaspora, severe concerns have arisen from the fear of double taxation on income.
The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, has addressed and dismissed the growing concerns that income will face double taxation, by both Nigeria and the taxpayer’s country of residence.
Oyedele said, “No. Income earned abroad and brought into Nigeria by a non-resident individual is now specifically exempted from tax in Nigeria, regardless of whether tax was paid abroad or not, for instance, those who reside in countries with no personal income tax.
“In addition, Nigeria has Double Taxation Agreements (DTAs) with several countries, and the new tax laws provide for unilateral relief where a DTA does not exist to ensure that the same income is not taxed twice.”
What to know about the double taxation agreement:
According to the Federal Inland Revenue Service, a Double Taxation Agreement is a formal and written agreement between sovereign states or between states and international organisations. The type of tax treaty within the purview of the Federal Inland Revenue Service (FIRS) and domiciled in the Tax Policy and Legislation Department is the Avoidance of Double Taxation Agreement (ADTA)
It simply means that a double taxation agreement (DTA) is a treaty between two countries that prevents the same income from being taxed twice. Also known as a Double Taxation Avoidance Agreement (DTAA), it provides legal certainty for individuals and businesses engaging in cross-border trade and investment.
How double taxation works
International double taxation can occur when an individual or company earns income in one country (the source country) but is a resident for tax purposes in another (the residence country). A DTA resolves the conflict that arises when both countries claim the right to tax the same income.
Purpose and benefits
DTAs provide crucial benefits for individuals and multinational entities operating in multiple jurisdictions.
