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No Tax ID, No Contracts, New Act Stipulates

... Contractors, foreign suppliers to face new compliance rules

LEADERSHIP News by LEADERSHIP News
1 year ago
in Business
Importance Of Taxation
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The newly gazetted Nigeria Tax Act, 2025, has introduced fresh compliance requirements that tighten the fiscal net on contractors, government agencies, and foreign suppliers seeking business in the country.
Under the law, Ministries, Departments and Agencies (MDAs) must ensure that all contractors and suppliers present a valid Tax Identification Number (Tax ID) before entering into or executing contracts.
While the Act does not explicitly require contractors to present a valid Tax Identification Number (Tax ID) before entering into or executing contracts, it mandates its inclusion in the remittance process, which necessitates the MDAs having this information.

Specifically, for Value Added Tax (VAT) collected or withheld by government bodies, Section 155(3) of the Act stipulates: “The remission of the VAT under subsections (1) and (2) shall be accompanied with a schedule showing the name, Tax ID and address of the contractor or supplier, invoice number, gross amount of invoice, amount of the VAT and the month to which the return relates”.

This provision requires MDAs to have the Tax ID of contractors and suppliers for proper VAT remittance. MDAs and Federal, State, and Local Governments are mandated to “collect or withhold VAT on taxable supplies made to them and remit it to the Service”.

In addition, the Act introduces a new compliance obligation for foreign suppliers. Section 151(1) explicitly states, “A non-resident person who makes taxable supplies to Nigeria shall register for tax and include VAT on its invoice for all taxable supplies”

The law further empowers the Nigeria Revenue Service (NRS) established under the Nigeria Revenue Service (Establishment) Act, 2025, to enforce compliance. This enforcement can occur through direct collection or by requiring Nigerian counterparties to withhold the tax.

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As stated in Section 151(2), “Where a non-resident person is making taxable supplies from outside Nigeria to persons in Nigeria, the taxable person to whom the supply is made in Nigeria shall withhold the VAT due on the supply and remit it to the Service”. Furthermore, Section 151(3) adds that “The Service may, by notice, appoint any person, including a non-resident supplier of taxable supplies, to collect the VAT and remit it to the Service”.

The NRS, established as part of the wider tax reforms, is expected to publish guidelines in the coming weeks on the registration process for foreign suppliers and compliance timelines for MDAs.
Section 151(7) of the Act grants this power, stating: “The Service may issue guidelines for the purpose of giving effect to the provisions of this section, including the form, time and procedure for filing returns and payment by non-resident suppliers appointed by the Service under subsection (3)”.

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