The Reason Nigeria Wants Financial Account Holders To Submit Self Certification Forms. On Thursday, September 9, 2020, the Government of Nigeria made this announcement through its twitter handle (now deleted). The information states that people having accounts in various financial institutions are required to obtain, complete, and submit the form to each one of the institutions.
Furthermore, this means that in Nigeria, every financial account holder, both individual or corporate, will now be expected to obtain a self-certification form and submit it at their respective financial institutions. These institutions include banks, insurance companies, investment firms, stockbrokers, dealers, mortgage firms, assets management firms, among several others. Keep reading on to get more details on The Reason Nigeria Wants Financial Account Holders To Submit Self Certification Forms.
The Reason Nigeria Wants Financial Account Holders To Submit Self Certification Forms
After the press release on the government twitter handle. Here are the various categories to fil the form. According to the Nigerian government, the self-certification is in 3 categories:
- Form for entity
- For Controlling Person (Individuals having a controlling interest in a legal person, trustee, etc)
- Form for individuals
A failure to execute this form could lead to a fine or the suspension of the account.
However, after reading this piece of information one may be thinking about the need for the said form. Meanwhile, we have other forms of identification service in existence such as National ID Card, BVN, Driver’s License, and many others.
Who Is Eligible To Fill The Forms
For the purpose of clarity, the FIRS says that the form is only to be administered on non-residents with taxable income from Nigeria, and residents with taxable income outside Nigeria. When this happens, the FIRS uses the word “Tax resident” to describe these individuals.
The self-certification form is the Nigerian Taxman’s way of telling people and corporations to voluntarily fill any form of taxable income they might have in any country.
However, the form is meant for those who have a foreign bank account, shares, controlling stakes, or other assets in any other country besides Nigeria. Also, those that earned dividends, interests on your savings, royalties, director’s fees, Or if you are a non-resident but with business or income from Nigeria.
The FIRS states that the information on tax residency is expected to be made available to financial institutions during account opening, as part of the Know-your-customer (KYC) and anti-money laundering (AML) initiatives.
What Set of People Should Fill The Form?
From the above paragraph, we have seen the set of people that are eligible to fill the form. Although the self-certification form is not meant for everyone, the government still stated that ALL ACCOUNT HOLDERS should fill the form. If this is the case, then it seems that the Nigerian government does not have the full information on people that fall in this category, hence the announcement demanding to fill the form is not for all except those sets mentioned above. So far, there is no dissemination of such information to the public on filling if any self-certification form. Maybe it is due to the current constraints on public gatherings and efforts at social distancing.
However, for now, there is still no sign of such information for filling of forms or to download it, fill, and send back a scanned copy to their respective financial institutions. Besides all the relevant details needed from most Nigerians could be sourced through the BVN, a unique number that contains relevant financial information, but it appears the self-certification offers more information that cannot be gotten from the BVN.
The Nigerian Government’s Endgame
The government’s announcement only vaguely states why it is demanding what seems to be yet another massive verification scheme with this comment “The forms are required by the relevant financial institutions to carry out due diligence procedures in line with the Income Tax Regulations 2019.”
As requested in the tweet, we went searching for more clues from the Federal Inland Revenue Service (FIRS), there we discovered that the self-certification form is actually part of a bigger play to bring tax revenues from individuals and business entities around the globe. The self-certification form is just one part of the FIRS’ initiative on the Automatic Exchange of Information (AEOI), a partnership it signed with 107 countries all over the world.
These countries include some of the most notable offshore investment locations such as:
- Cayman Islands
- The Bahamas
- Hong Kong
- The United Arab Emirate (UAE)
- The United Kingdom
The absence countries are the United States of America. Nigeria, Ghana, Liberia, South Africa, and Morocco join Mauritius as part of the six African countries on the list.
What Is The Aim of The Self-certification Form?
The aim of the self-certification form is to collect financial information individuals and/or corporations making investments, savings, or earning dividends and director fees from any of the listed countries. The function of the AEOI is for the FIRS to receive financial details from different types of financial institutions, in over 107 countries, about non-resident individuals and corporations that are doing business in Nigeria, without having to request for it.
According to PWC.com, the same also applies to resident individuals and companies that receive income from countries outside Nigeria.
Consequently, the FIRS can effectively implement taxes on the global income of resident individuals/corporations, and the Nigerian income of non-resident individuals/corporations. On the other hand, financial information about individuals, shareholders, and corporations in Nigeria will also be sent to these countries automatically.
Matthew Gbojunbola, Director, Tax Policy at FIRS, at an interview with Tax matters explained that the development of the Exchange of information service has been in stages. Before now, Nigeria had to request for information on a company. For example France before receiving it, then it graduated to a stage where France would send any information it has on Nigerian-based companies once it notices any before an automated process that needed little human intervention was finally employed.
In the past few years, the Nigerian Federal government has lamented the poor rates of taxation in the country. This initiative comes on the heels of other reforms by Nigeria’s tax regulator, it looks to improve taxation revenues, especially at a time when traditional revenue sources like oil have been badly hit. To get more information use the link below. https://techpoint.africa/2020/07/21/inside-nigerias-digital-identification/