Topice Consulting

04/03/2022

We are in the business of ensuring that you achieve efficiency and high productivity with the aim of making you stand out among the best in your industry.

04/03/2022

29/05/2020

Topice Consulting Overview
We at Topice Consulting make it a priority to initially understand the type of business, mode of operations and industry our clients belong.
We subsequently identify the needs of the client as it relates to accounting process, in the end, we present the new clients with the best possible solution to their accounting need and challenges. The same can also be said in the the areas of Taxation and Assurance processes.
This solution proffered would have to be satisfactory to the client for a good working relationship to exist.
Our pricing structure is primarily based on the volume of transactions and level of work presented by the client but our baseline for pricing is in accordance what is obtainable in our service industry.
We work with clients that require accounting, taxation and assurance solutions to their accounting taxation and assurance needs and challenges.
Our work tools are primarily made of Microsoft office which is bedrock of Accounting analysis and formats.

28/05/2020

CBN announces new policy measures, reduces interest rates for financial institutions
CBN will be reducing interest rates on its facilities through participating financial institutions from 9% to 5% per annum for a year.

As part of its monetary and financial policy measures to further mitigate the impact of the coronavirus pandemic on households, and businesses, the Central Bank of Nigeria (CBN), has approved regulatory forbearance for the restructuring of credit facilities in the Other Financial Institution (OFI) sub-sector.

This was disclosed in a circular signed by the CBN’s Director for Financial Policy and Regulatory Department, Kevin Amugo, on Wednesday, May 27, 2020.

In the circular, stated that Amugo the apex bank will be reducing interest rates on its facilities through participating financial institutions from 9% to 5% per annum for a year with effect from March 1, 2020

According to the circular, CBN has approved regulatory forbearance for the restructuring of credit facilities in the OFI sub-sector as follows:

‘’CBN Intervention facilities availed through participating OFIs are granted a further one-year moratorium on all principal repayments, effective March 1, 2020.

‘’Interest rates on the CBN intervention facilities through participating OFIs hereby reduced from 9% to 5% per annum for 1-year effective March 1, 2020.

‘’OFIs are granted leave to consider temporary and time-limited restructuring of the tenor and loan terms for households and businesses affected by COVID-19, subject to the recently issued guidelines for restructuring affected credit facilities in the OFIs sub-sector.”

This new policy measure by the apex bank is in continuation of its intervention in the nation’s economy so as to help manage the crisis caused by the coronavirus pandemic and reduce its effects on household and businesses.

This is coming a day before the Monetary Policy Committee (MPC) meeting for the month of May which has been slated for tomorrow Thursday, May 27, 2020.

Meanwhile, the CBN said that it shall continue to monitor developments and implement appropriate measures to safeguard financial stability and support stakeholders impacted by the COVID-19 pandemic.

15/05/2020

FIRS Finance Act Circular
Regulated securities lending
transactions

Background
The Federal Inland Revenue Services
(FIRS) has issued a circular on the tax
implications of regulated securities
lending (RSL) transactions in Nigeria.
RSL involves various parties including:
• Lender: Owner of dividend-bearing
securities.
• Borrower: Borrows securities from
Lender and provides a collateral.
• Agent: Facilitates transactions between
both parties.
The Borrower obtains securities from
Lender through an approved Agent, for an
agreed fee and a stipulated period.
Borrower provides collateral to Lender
usually in the form of cash. Borrower
seeks to profit by selling and repurchasing
the securities (“short selling”).
Lender receives the securities back at the
end of the transaction and profits by
earning a fee.
Agent profits from commission or
brokerage fees.
In the period that ownership is transferred
temporarily to Borrower, Borrower pays
any dividends on the securities to Lender.
Also, Lender pays interest earned on the
collateral to the Borrower. These are
regarded as “compensating payments”
which can be made directly to Borrower or
Lender, or through the Agent.
These activities are subject to approval
and regulation by the Securities and
Exchange Commission (SEC).
Highlights
The circular clarifies the following:
Companies Income Tax (CIT)
Rights, bonuses, fees and other benefits
accruing to Borrower or Lender constitute
taxable income.
Dividends paid by Borrower to Lender
are Franked Investment Income
exempt from CIT in Lender’s hands.
Such dividends paid by Borrower to
Lender will not be an allowable
deduction for the Borrower.
Interests on collateral paid by Lender to
Borrower are taxable in Borrower’s
hands.
Interests paid by a Lender to earn taxexempt dividends are not taxdeductible.
Dividends and interests received or
paid by the Agent on behalf of other
parties are exempt and non-deductible
respectively.
Withholding Tax (WHT)
WHT applies on interests paid by
Lender to Borrower. However, if Lender
pays through Agent, the responsibility
to deduct WHT is on the Agent.
WHT does not apply on dividends paid
by Borrower to Lender irrespective of
whether the dividends are paid directly
to Lender or through the Agent.
The WHT Regulations issued under
Section 81 of CITA will not apply to
compensating payments made in an
RSL.
Personal Income Tax (PIT)
The amendments relating to RSL only
affect entities taxable under the CITA.
Therefore, individuals that participate in
RSL will continue to be taxed in line
with existing provisions of the PIT Act.
Stamp Duties

RSL instruments such as receipts,
shares, stocks or securities and other
documents issued by the SEC are
exempt from stamp duties.
Capital gains tax (CGT)
Transfer of securities in RSL
transactions are not disposals. Capital
gains on the sale of shares are already
exempt from CGT under the CGT Act.
Takeaway
The FIRS circular considers rights and
bonus issues as taxable income
whereas in the strict sense they are
“compensating payments” in respect of
capital, and therefore should not be
taxed. Rights and bonus issues are
adjustments against share capital which
do not constitute income for the holders.
The circular regards dividends paid by
Borrower to Lender as franked, and
exempt from CIT. However, this may not
always be the case where such
dividends have been exempted from
WHT.
Overall, the new tax regime introduced
by the Finance Act will facilitate
activities in RSL which is expected to
have a positive impact on the capital
market.
A

15/05/2020

FEDERAL INLAND REVENUE SERVICE
20 SOKODE CRESCENT, WUSE ZONE 5, P.M.B 33, GARKI, ABUJA, NIGERIA
Subject: CIRCULAR ON TAX IMPLICATIONS OF THE OPERATION OF
REGULATED SECURITIES LENDING TRANSACTION (‘SEC
LENDING’) IN NIGERIA
This circular is issued for the information and guidance of the general public,
taxpayers and tax practitioners in line with the provisions of the relevant tax laws.
This instant circular amends, updates or replaces contents of any circular, notice
or other publication previously issued by the Service that is inconsistent with its
contents to the extent of such inconsistency.
1.0 Introduction
The objective of this Information Circular is to provide clarifications on the tax
treatment of Regulated Securities Lending Transaction (SEC Lending), which is
approved or regulated by the Securities and Exchange Commission (SEC).
Specifically, this Information Circular provides clarifications on the application of
Sections 9, 23, 24, 29, 78, 80, 81 and 105 of the Companies Income Tax Act
(CITA) Cap. C21 LFN 2004, Schedule to the Stamp Duties Act (SDA) Cap. S8 LFN
2004 (as amended) and the provisions of the Personal Income Tax Act (PITA)
Cap. P8 LFN 2004 (as amended).
2.0 Relevant Regulatory Provisions
The operation of SEC Lending in the Nigerian capital market is governed by the
provisions of the Investment and Securities Act, the Securities and Exchange
Commission Rules 2013 (as amended) and other extant laws and regulations while
the taxation is governed by CITA and other relevant tax laws.
3.0 Nature of Regulated Securities Lending Transaction
“Regulated Securities Lending Transaction” is an arrangement where a lender
enters into an agreement with an agent, for depositing securities for the purposes
of lending, through the lending agent, in accordance with SEC rules, and the
INFORMATION CIRCULAR
NO: 2020/03 Publication Date: 29th April 2020
Borrower enters into a separate agreement with the lending agent for the
purposes of borrowing of the securities. It will also include an arrangement where
the borrower deposits collateral with the Lender, through the agent as a security
for the borrowed securities.
Any direct agreement between the lender and the borrower for lending and
borrowing of securities will not qualify for a SEC Lending.
4.0 Interpretation
Section 105 of CITA defines a "Regulated Securities Lending Transaction" as any
securities lending transaction conducted pursuant to rules made by the Securities
and Exchange Commission.
In the context of Securities Lending Transactions and for the purposes of this
Information Circular, the following terms shall have the meanings stated herein:
“Approved Agent”, “Agent” or “Lending Agent” means any person
approved by the Securities and Exchange Commission to function as an
intermediary for the conduct of a Regulated Securities Lending Transaction.
In line with the above, an agent is a middleman through which the lender
will deposit the securities for lending and the borrower will borrow the
securities.
“Borrower” means an approved borrower in a Regulated Securities
Lending Transaction.
As such, a borrower is a person who borrows the securities under SEC rules
and regulations, through an agent.
“Collateral” means acceptable forms of securities, cash, or a combination
of acceptable forms of securities delivered by the borrower to the lender as
a security to support a loan.
“Compensating Payments” means any payments made in lieu of interest
or dividend pursuant to a Regulated Securities Lending Transaction.
As such, payment made under SEC Lending where the underlying
transaction giving rise to the payment is a receipt of dividends or interest
in a Regulated Securities Exchange Transaction will be treated as
compensating payments.
“Dividend” means compensating payments received by a Lender from its
approved agent or Borrower in a Regulated Securities Lending Transaction
if the underlying transaction giving rise to the compensating payment is a
2
3
receipt of dividends by a Borrower on any shares or securities received from
its approved agent or a Lender in a Regulated Securities Lending
Transaction".
As such, dividend is a payment ‘generated’ by the borrower to compensate
the lender for the net dividend not distributed to the lender on the borrowed
shares or other securities (e.g. Bonds)
“Interest” means compensating payments received by a Borrower from its
approved agent or a Lender in a Regulated Securities Lending Transaction
provided that the underlying transaction giving rise to the compensating
payment is a receipt of interest by a Lender on the collateral it received
from its approved agent or a Borrower in a Regulated Securities Exchange
Transaction.
As such, interest is a payment ‘generated’ by the Lender to compensate the
Borrower for the net interest not received by the Borrower on the collateral
deposited with the Lender against the borrowed securities.
“Lender” means an approved Lender in a Regulated Securities Lending
Transaction.
As such, a Lender is a person who deposits securities registered in his name
or in the name of any other person duly authorised on his behalf with an
agent for the purpose of lending under SEC regulations.,
5.0 Income under a SEC Lending
Income under a Regulated Securities Lending Transaction includes:
1. Dividends
2. Rights
3. Bonus
4. Redemption benefits
5. Interests
6. Securities lending fees or any other right or benefit accruing on the
securities lent.
6.0 Taxation of the Income on SEC Lending under CITA
6.1 Rights, Bonus, Redemption Benefits and Other Income
In accordance with Section 9(1)(h) of CITA, rights, bonus, profits, fees or
any other benefit accruing to a Borrower or Lender under a SEC Lending is
wholly taxable in accordance with the provisions of CITA or other relevant
tax laws.
4
6.2 Dividend and Interest Earned under a SEC Lending
The following provisions of CITA shall apply to dividend and interest earned
under a SEC Lending:
6.2.1 Section 9 of CITA
Gross dividend and interest received by a Lender and Borrower respectively
constitutes income that is liable to tax under Section 9(1)(c) of CITA.
Also, rights, bonus, profits, fees and any other benefits accruing to a
Borrower or Lender under a SEC Lending constitutes taxable income under
Section 9(1)(h) of CITA.
6.2.2 Section 23 of CITA
Notwithstanding the provision of Section 9(1)(c) of CITA, in line with Section
23(1)(t) and (u) of the Act, dividend received by a Lender from a Borrower
or by an agent from a Borrower under SEC Lending is not subject to further
tax in the hand of the Lender as it is franked investment income.
By the provisions of Section 23(1)(u), interest received by an Agent from a
Lender under SEC Lending is exempt from tax in the hand of the Agent.
Consequently, a Lender or an Agent that included dividend received under
SEC Lending in its income; or an Agent that included interest received under
SEC Lending in its income shall “back it out” while computing the taxable
income.
NOTE:
Interest received by a borrower under a SEC lending transaction is taxable
under the law and shall not enjoy the exemption provided by Section 23(1)
of CITA.
6.2.3 Section 24 of CITA
In accordance with Section 24(1)(l) of CITA, interest paid by a lender to an
agent or a borrower under a SEC Lending is an allowable deduction.
However, since the dividend received by the lender with respect to that
transaction is exempt from tax under Section 23(1)(t) of CITA, and in line
with section 27(1)(h), the interest shall not be allowed as deduction in
computing the company’s assessable profits.
5
6.2.4 Section 27 of CITA
In accordance with Section 27(1)(i), dividend generated by a borrower, and
paid to the agent or Lender under SEC Lending will not be an allowable
deduction to the borrower.
Also, in accordance with Section 27(1)(j), interest or dividend generated by
the agent and paid to a borrower or lender respectively under a SEC Lending,
will not be an allowable deduction to the agent.
6.2.5 Section 78 of CITA
Interest paid directly by a Lender to a Borrower is liable to WHT deduction as
provided under Section 78 of CITA. However, where the Lender passes the
interest through the agent for the benefit of the borrower, the obligation to
withhold tax is shifted to the agent. As such, the payment of interest from
the Lender to the agent shall not be subject to WHT. The remittance of the
interest by the agent to the Borrower is subject to WHT.
S/N Payment Direction Result
1. Lender pays directly to borrower Lender to withhold tax
2. Lender pays interest through agent Lender not to withhold tax
3. Agent remit interest to borrower Agent to withhold tax
6.2.6 Section 80 of CITA
Payment of dividend from a borrower to an agent or lender shall not be
subject to deduction of WHT under Section 80 of CITA. Similarly, WHT shall
not be applicable when an agent pays the dividend to the lender.
6.2.7 Section 81
Any payment of dividend or interest under the SEC Lending is exempt from
the application of Section 81 of CITA. Consequently, the provisions of the WHT
Regulations shall not apply where dividend or interest is paid under SEC
Lending.
7.0 Income Earned by an Individual under a SEC Lending
Dividend and interest under SEC Lending received by persons chargeable to tax
under PITA are not exempt from tax, as the exemptions and concessions provided
in CITA relates to entities assessable to tax under the Act. As such, the existing
provisions of PITA shall continue to apply in the taxation of dividend, interest,
rights, bonus, profits, fees and any other benefit accruing to an individual under a
SEC Lending.
6
8.0 Application of Stamp Duties Act to SEC Lending
The following documents and transactions are exempt from Stamp Duties under
the Schedule to the Stamp Duties Act:
1. Receipts given by any person under a SEC Lending
2. Shares, stocks or securities transferred by a Lender to its agent or a
borrower in furtherance of a SEC Lending.
3. Shares, stocks or securities returned to a Lender or its approved agent
by a borrower in pursuant to a SEC Lending.
4. All documents issued by the SEC in relation to a SEC Lending.
9.0 Amendment or Revision of the Circular
The Service may, at any time, withdraw or replace this Circular or publish an
amended or updated version.
10.0 Enquiries
Any request for further information or clarifications on this Information Circular
should be directed to the:
Executive Chairman,
Federal Inland Revenue Service,
Revenue House, No 20 Sokode Crescent,
Wuse Zone 5, Abuja.
Or
Director, Tax Policy and Advisory Department
Federal Inland Revenue Service
Revenue House, No 15 Sokode Crescent,
Wuse Zone 5, Abuja.
Or
Visit our website: www.firs.gov.ng
Email: [email protected]
Telephones: 08159490002, 08159490001, 08159490000

11/05/2020

FIRS issues information circular on
the implementation of VAT changes
in the Finance Act

Background
The Finance Act(FA)
2019 introduced
significant amendments to the Value
Added Tax Act (VATA). The FIRS circular
seeks to provide guidance on how the
FIRS intends to implement the VAT
amendments.
In this publication, we examine some of the
matters clarified in the FIRS circular,
including:
1. Definition of goods and services;
2. Transition to the new VAT rate,
3. VAT registration and deregistration;
4. Self accounting for VAT;
5. Registration by non-residents;
6. Introduction of VAT threshold;
7. Business reorganisation;
8. Exported service;
9. Penalty regime; and
10. Status of the information circular.

Definition of supply of goods and
services
The circular reiterates that apart from
tangibles, VAT now applies on the supply
of intangible goods in Nigeria, and
provides examples such as the supply of
rights in mineral resources, copyrights and
trademarks.
In line with the FA, goods are considered
to be supplied in Nigeria if they are
physically present, assembled or imported
for use in Nigeria. Also, if the beneficial
owner of the rights in the goods is a
taxable person in Nigeria and the rights are
situated, registered or exercisable in
Nigeria.
For services, VAT will apply if the service
is performed to persons in Nigeria
irrespective of the location of the provider or
medium of delivery.

Transition to new VAT Rate of 7.5%

The VAT rate has been increased from
5% to 7.5%. The FIRS Circular states the
effective date as 1 Feb 2020.
In terms of which rate to use and the cutoff
date, the FIRS mentions that:
• a service is supplied when it is
performed or an agreed milestone is
reached
• goods are supplied upon delivery or
transfer of risk, whichever occurs first.
Based on the above, any taxable supply
made from 1 Feb 2020 would be subject
to VAT at 7.5%. Where it is not practicable
to determine the time of supply, FIRS may
rely on the date contained in invoices,
bills, debit notes, good received notes,
journal entries or waybills as the date of
supply.

Registration and de-registration of
taxable persons
The amended VATA requires businesses
to register for VAT upon commencement.
Also, when ceasing a trade, the tax law
mandates businesses to notify the FIRS
within 90 days of cessation. In addition,
the circular states that supplies made
post-cessation will be considered as
supplied immediately before ceasing.
The penalties for failure to register for VAT
have been increased, and new penalties
have been introduced for failure to notify
FIRS of cessation.

Registration by non-residents
The circular highlights that a Non-Resident
Company (NRC) that “makes taxable
supplies” to a Nigerian resident should:
• register for the tax with the FIRS using
the address of the person to whom it is
making a supply; and
• include VAT on its invoice.
NRCs that have a fixed base in Nigeria
should register using the address of the
fixed base and comply with charging, filing,
payment and other requirements as if it
were a Nigerian company.

Self-Accounting for VATThe circular clarifies that a taxable person
should self-charge and remit VAT on
transactions with:
• a supplier who is exempt from charging
VAT because of the N25m threshold;
• a taxable person that fails to charge
VAT; and
• an NRC without a presence in Nigeria.
A taxable person that self-charges VAT
should remit the VAT using VAT Form 006
and maintain a schedule of such
transactions.

Introduction of VAT Threshold

The FA exempts companies that make
taxable supplies of less than N25m from
charging, collecting, remitting and filing
monthly VAT return to the FIRS. Such
businesses are also exempt from penalties
for non-registration.
A taxable person may determine if the
threshold has been met as follows:
a) A business that made taxable supplies
of N25m or above prior to 1 February
2020 should continue to account for VAT,
even if taxable supplies in the current
year are below N25m;
b) A business that made taxable supplies
less than N25m prior to 1 February 2020,
but makes or expects to attain the
threshold in the current year should
account for VAT in the month it meets or
expects to meet the threshold; and
c) A business may volunteer to account
for VAT (subject to notifying the FIRS),
even though it does not meet the VAT
threshold.
“Taxable supplies” for determining the
N25m threshold is defined to include all
supplies for a consideration irrespective of
whether they are VAT exempt. However,
this excludes the taxable supply of the
capital assets and sale of the whole or part
of the business.

Business Reorganisations

The FA 2019 introduced a VAT
exemption on transfer of assets in a
business reorganisation between related
parties, subject to the following
conditions:
a) The companies must justify to the
FIRS that they have been related
parties for at least one year before
the transaction;
a) The transferred assets should not be
disposed of at least a year after the
transaction. Where the assets are
sold within this period, any
concessions granted will be
withdrawn by the FIRS, and penalties
and interest will be charged from the
transaction date.

Exported Service
The FA 2019 amended the definition of
“exported services” in the VATA to
mean: “a service rendered within or
outside Nigeria by a person resident in
Nigeria, to a non-resident outside
Nigeria. Provided that a service
supplied to the fixed base or permanent
establishment of a non-resident person
shall not qualify as exported services”
The FIRS circular highlights that for a
service to qualify as an exported service:
• it must be provided by a Nigerian
resident to a non-resident; and
• the non-resident person must be
outside of Nigeria when consuming the
service.
The Circular also clarifies that the following
do not qualify as exported services:
a) Where a non-resident person is in
Nigeria or consumes the service while
in Nigeria;
a) Where a non-resident provides a
service through its fixed base in
Nigeria;
a) Where a Nigerian resident provides
service to the fixed base of a nonresident
in Nigeria; and
a) Where a service is provided to a
consumer who is in Nigeria, on behalf
of a non-resident person.

Penalty Regime
The FA 2019 amended the VATA to
increase the penalty for failure to comply
with VAT obligations. The circular
summarises the penalties as follows:
• Failure to register for VAT, to notify the
FIRS of change of address or permanent
cessation of business or to submit VAT
returns: N50,000 for the first month, and
N25,000 for each subsequent month of
failure;
• Failure to remit VAT attracts penalty at
10% of the VAT payable plus interest at
the prevailing CBN minimum rediscount
rate (MRR).

Status of the FIRS Circular

The Circular supersedes other publications
previously issued by the FIRS on VAT to the
extent of any inconsistency and may be
withdrawn, amended or replaced at any time

01/05/2020

Happy Workers Day

23/08/2019

For corporate organisations and individuals who require the services of an Audit, Taxation Management and Accountancy professional....


We at Topice Consulting render such services and more in an accurate and professional manner.

Please find below our corporate profile for your perusal:

Topice Consulting (Chartered Accountants and Tax Practitioners)

General information
The firm was registered by Corporate Affairs Commission (CAC) in May 2015 to provide high quality professional services to clients in various sectors of the economy. The firm is principally driven by sound professional and business principles geared towards providing value-added services through highly experienced and well trained professionals.

Our vision and mission

Vision:
To be the first choice solution-driven professional service firm.

Mission:
To provide uncommon and value-added services to our clients; towardsm the attainment of their goals and objectives.

Our Professional services:
-Audit & Assurance Services
-Investigation & Due Diligence
-Taxation Management Service
-Accountancy Service
-Financial Advisory Service

Management:

Tope Sodeye-HND,ACA,ACIT.
The Managing Consultant is a Chartered Accountant and Tax Practitioner with over 9 years varying experience in Financial, Tax Management, Audit and Investigation assignments. An associate member of both the Institute of Chartered Accountants of Nigeria (ICAN) and the Chartered Institute of Taxation of Nigeria (CITN) he is also a holder of a Higher National Diploma in Accountancy and Finance from Yaba College of Technology, Yaba.

Contact Details:
Topice Consulting
-3 Okeho street Ire akari estate Isolo Lagos Nigeria.

Managing consultant
-Tope Sodeye: 08038158203,08078139239.
Email: [email protected].