The Federal Inland Revenue Service (FIRS) recently issued a Public Notice informing the general public of its Circular No: 2019/03 on the Claim of Tax Treaties Benefits in Nigeria (the Circular). The Circular was issued by the FIRS to provide a general description of the application of the Double Tax Treaties (DTTs) between Nigeria and other countries especially on the treaty benefits that can be accessed by residents of either contracting countries.

The Public Notice specifies that a taxpayer who wishes to access any of the benefits in the tax treaties must comply with the procedures set out in the Circular, which becomes effective from 1 January, 2020.


The Circular first sets out the fourteen existing DTTs, to which Nigeria is signatory with the following countries: Italy, the United Kingdom, Belgium, Pakistan, Czech Republic, Slovakia, France, the Netherlands, Romania, Canada, South Africa, China, Philippines and Singapore. These DTTs provide certain tax benefits to taxpayers from the contracting countries and ensure that residents of Nigeria and the treaty partner country are not taxed twice on the same income in both jurisdictions. They also include provisions that ensure that resident companies or individuals do not benefit unduly by not paying appropriate taxes in any of the treaty countries through tax evasion or avoidance.

The Circular identifies persons entitled to benefit from treaties in Nigeria and these include those who are residents of Nigeria, residents of the treaty partner country or residents of both Nigeria and the treaty partner country. The Circular also notes that a claim for tax credit under any of the DTTs can only be made not later than two years after the year of assessment in which the foreign tax was paid.

The Circular sets out the conditions which must exist for a taxpayer to take advantage of the benefits provided by a DTT. The conditions consist of the following:

  • The taxpayer is liable to tax in the treaty country of which he is a resident;
  • The income in question is not exempted from tax in Nigeria;
  • The tax for which that individual is seeking benefit is covered by the treaty;
  • The benefit is not specifically excluded under the treaty;
  • The benefit is claimed within the time stipulated by the treaty or domestic laws.

In addition to the conditions above, the following must exist, for a taxpayer to benefit from a reduced Withholding Tax (WHT) rate under the DTTs:

  • the beneficial owner of the income must be a resident of the other treaty partner country, even if the income was not paid directly to him;
  • the income must not be connected with a Permanent Establishment, which the beneficiary has in the paying country.

Instructively, the Circular introduces a Principal Purpose Test. It provides that a taxpayer may be denied treaty benefits if based on facts and circumstances, it is discovered that its residency in one of the treaty countries was principally for the purpose of accessing that treaty benefit (treaty shopping) or it is discovered that one of the principal purposes of the arrangement of a transaction or business is to take advantage of the treaty.

The Circular sets out the procedure for claiming treaty benefits in Nigeria, which involves:

  • the Submission of a formal application addressed to the Executive Chairman of the FIRS accompanied by;
  • a duly completed certificate of residence, with the official seal of the relevant revenue authority;
  • for Nigerian residents seeking credit relief for foreign tax paid, evidence of foreign tax paid, which was issued to the taxpayer by the revenue authority of the treaty partner;
  • For non-residents: evidence to support the income, on which the treaty rate is being sought.


The Circular is a progressive step towards ensuring efficiency and effectiveness in the administration of DTTs in Nigeria. The Circular provides clarity for ascertaining the eligibility of persons to benefits from the DTTs and the procedure for obtaining the benefits provided in the DTTs.

It is expected that this development will improve treaty administration in Nigeria and provide clarity for taxpayers seeking to benefit from the DTTs. It also provides a basis for treaty partners to inform their residents as to the requirements for enjoying benefits in Nigeria so that they can arrange their affairs in a manner that ensures they are in compliance with the circular..

Given that the Circular takes effect from 1 January, 2020, eligible taxpayers are advised to seek professional advice and guidance on how the Circular will affect their operations in Nigeria, especially for the purpose of claiming their tax treaty benefits.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.