FEDERAL INLAND REVENUE SERVICE COUNTRY-BY-COUNTRY REPORTING REGULATIONS
a. Introduction
The Federal Inland Revenue Service (FIRS) has published the Income Tax (Country-by-Country Reporting) Regulations, 2018 (CbCR Regulations). The CbCR Regulations was made public on 19 June 2018 and have an effective date of 1 January 2018.
The Country-by-Country reporting is a response to evidence-based research on the direct consequence of harmful tax practices that result in profits being moved away from where they were made to the ultimate benefit of the taxpayer.
b. Implications of CbCR
The CbCR is one of the three-tiered transfer pricing documentation approach recommended by the Organisation for Economic Cooperation and Development (OECD) in the Action 13 report of the Base Erosion and Profit Shifting (BEPS) project unveiled in October; 2015. The CbCR contain information on the location of revenue, profits, taxes, employees and economic activity within large MNE Groups, based on a standard template. The objective of the CbCR is to allow tax administrations to perform high-level transfer pricing risk assessments and to evaluate other BEPS related risks.
In Nigeria, the ultimate parent entity (UPE) of an MNE Group that is resident for tax purposes in Nigeria would be obliged to file the CbCR, where the consolidated revenue of the Group is N160 billion or above. As provided in the Regulations, the CbCR must be filed within 12 months following the MNE Group’s accounting year end.
An MNE Group member (Constituent Entity) whose UPE is not tax resident in Nigeria, is required to notify the FIRS of the identity and tax jurisdiction of the entity responsible for filing the CbCR. This notification must be made no later than the last day of the reporting accounting year of the MNE Group.
c. Notification and Consequence for Non-Compliance
To show commitment to driving compliance with the Regulation, the FIRS has subsequently released guidelines for completing the CbCR template and more recently, a Public Notice reminding MNE Groups operating in Nigeria of their obligation to make the above notification to the FIRS. The public Notice serves as a wake-up call for MNE Groups to comply and avoid stiff administrative penalty imposed by the Regulations for non-compliance.
Penalty for late filing of CbCR has been determined at N10,000,000 for the first month of default and N1,000,000 for every month the default continues while penalty for incorrect/false report is N10,000,000. Penalty for failure to notify FIRS of the MNE Group’s UPE, Surrogate Parent Entity or identity & residence of the Group’s reporting entity has been determined at N5,000,000 for the first month of default and N10,000 for every day the default continues.

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