Emerging Markets Rates and Currencies Handbook

173 Citi | Emerging Markets Currencies Handbook 2021 Nigeria Item Inter-Co Debt Offshore Bank Loans Offshore Local Borrowing Derivatives Equity W/H Tax 10% WHT • Under certain tax treaties can be reduced to 7.5% The tax treaties entered into by Nigeria do not provide for a reduction in WHT rates below 7.5% 10% WHT • Under certain tax treaties can be reduced to 7.5% The tax treaties entered into by Nigeria do not provide for a reduction in WHT rates below 7.5% 10% WHT N/A 10% WHT on dividends Dividends from offshore are taxable except if repatriated into Nigeria through government- approved channels (i.e. any financial institution authorised by CB of Nigeria for FX dealing) Deductibility of interests Generally deductible No tax-related thin-capitalization rules apply GAAR, arm’s-length pricing for related parties The 2019 Finance Act provides a limitation (30% of EBITDA) on interest expense on foreign connected party debt. Excess interest can be carried forward for up to 5 years Fully deductible Interest on government bonds is tax exempt Interest on foreign currency domiciliary accounts is also exempt N/A N/A Deductibility of FX losses Realized losses are tax deductible Unrealized FX Losses are taxable (they will be added back for tax purposes) Other taxes, duties Interest on any foreign loan or on any loan granted by a bank for manufacturing goods for export is exempt from tax as follows: • Example: Repayment over 7 years, moratorium minimum 2 years, 70% exemption Dividend paid to Unit Trust and Real Estate Investment companies are exempt from WHT Comments N/A N/A N/A N/A N/A Note: Citigroup Inc. and any of its affiliates do not provide accounting, tax, or legal advice. Please seek advice from a relevant licensed advisor. Source: Relevant legislation, publicly available sources. Subsidiary Funding — Tax Consideration Tax Summary — Nigeria