The Federal Inland Revenue Service (FIRS) released guidelines concerning the mutual agreement procedure (MAP) to resolve income tax treaty-related disputes. The MAP dispute resolution device allows tax administrations to resolve disputes regarding the application of the income tax treaty measures to address double taxation.
Among the items addressed in Nigeria’s MAP guidelines [PDF 123 KB] are certain key aspects, described briefly below.
The MAP guidelines specify that a taxpayer that is a resident in Nigeria is eligible to apply for MAP, if it considers that the actions of either or both Nigeria and the treaty partner’s tax authorities result or will result in a taxation that is not in accordance with the provisions of the income tax treaty, regardless of the remedies provided by Nigerian domestic law. Subject to the provisions of the relevant tax treaty, a non-resident person can also make an application under the MAP guidelines. A MAP application can be made in respect of matters relating to:
Period of limitation
The MAP guidelines stipulate that the time limit for presenting a case for competent authority assistance depends upon the specific terms of the MAP article of the applicable income tax treaty. When a time limit for presenting a case to invoke MAP is not specified in the relevant tax treaty, the competent authorities of the treaty signatories are to agree on the applicable time limit. Nonetheless, the case must be presented to the Nigerian competent authority within three years from the date of issuance of a notice of assessment.
Roles of the taxpayer during the MAP process
The MAP guidelines require the taxpayer to provide necessary support to the Nigerian competent authority in the course of the MAP process. The taxpayer is expected to be notified by the Nigerian competent authority when an agreement is reached by the two countries involved in the MAP process. The agreement will only be finalised upon written consent of the taxpayer.
Termination of the MAP process
A MAP process may be terminated when adequate, accurate and/or complete information was not provided by the taxpayer. The Nigerian competent authority may propose terminating a MAP process based on the shortcomings highlighted in the MAP guidelines.
Withdrawal of a MAP request
A taxpayer may withdraw its request at any time before a MAP agreement is reached. The withdrawal of a request for MAP is expected to be made in writing to the FIRS executive chairman.
Tax collection during MAP
The MAP guidelines state that a request for MAP does not affect the requirement for payment of the tax liability or collection action by the relevant tax authority.
The MAP guidelines provide taxpayers with guidance as to how to resolve situations of double taxation. Tax professionals have observed that the federal government needs to expedite its actions on signing and ratifying more income tax treaties, in particular with Nigeria’s major trading partners, so as to provide taxpayers a broader network of income tax treaties with a view to reducing the exposure to double taxation. Taxpayers also may want to consider the MAP guidelines in initiating pre-filing consultations with the Nigeria competent authority when there are unresolved double taxation matters.
Read an April 2019 report [PDF 128 KB] prepared by the KPMG member firm in Nigeria
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