Like every other country in the world, Nigeria has regulatory bodies overseeing the activities of corporate bodies; one of such regulatory bodies is the Federal Inland Revenue Service (FIRS) which administers the taxation of taxable corporate entities in Nigeria.
All companies carrying on business in Nigeria (both indigenous and foreign companies) are required to register with the Federal Inland Revenue Service (FIRS) for income tax and value-added tax (VAT) purposes, as well as with the state of residence’s Internal Revenue Services for employees’ income tax purpose where applicable.
Some countries have a “Double Taxation Treaty” with Nigeria. The implication of this is that where a foreign company’s country of origin has a double taxation treaty with Nigeria, the foreign company is exempted from taxation in Nigeria, provided that its parent company abroad, has paid its tax.
Foreign companies carrying on business in Nigeria are taxed in different ways, depending on the nature of their business. A foreign company participating in business in Nigeria via a Foreign Portfolio Investment (FPI) and earns income in the form of dividends, royalties or interest is taxed by way of withholding tax deducted by the Nigerian company who is a tax payer and remitted to the Federal Inland Revenue Service (FIRS). Foreign companies in this category need only register with the FIRS and obtain a Tax Identification Number (TIN) to enable the Nigerian company file the taxes deducted on their behalf.
However, foreign companies who have incorporated a company in Nigeria for business purposes are required to register with the FIRS and file annual returns as at when due, like a Nigerian company.