Emerging Markets Rates and Currencies Handbook

specifies what is needed for Trade Flows. Nigeria only permits letters of credit (LC) or bills for collection (BFC). Open accounts are not permitted. Clients are required to underlying document for the purpose of repatriation of dividend, loan repayment etc. open a regulatory document called Form M in order to initiate an import. Capital Flow and FDI Capital inflows into Nigeria must be converted into local currency and a Certificate of Capital Importation (CCI) is issued, evidencing the inflow of capital. The CCI is a key Citibank Nigeria Limited 27 Kofo Abayomi, Street, Victoria Island, Lagos, Nigeria FX Sales Contact: +234 1 463 8488 Tax Summary – Nigeria Nigeria Country Tax Deductibility and Considerations Inter-Co Debt Offshore Bank Loans Offshore Local Borrowing Derivatives Equities 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 • N/A • 10% WHT on dividends • Dividends from offshore are taxable except if repatriated into Nigeria through governmentapproved channels (i.e. any financial institution authorised by CB of Nigeria for FX dealing) Deductibility of interests • Generally deductible • 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 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