The Finance Business Partners

Tax Friday Question Company XYZ entered into a 10-year rental agreement with ABC Ltd. Which taxes are applicable? Please feel to share your answers. Do have a wonderful day ahead.

Weekly Anonymous Sharing Today we have a community member seeking your advice on an intriguing work related issue. We look forward to diverse insights and opinion on the way forward. Thank you.

Earnings Stripping In today's business world, companies often look for ways to reduce their tax obligations. One common approach used by multinational corporations is earnings stripping. This technique can affect government revenue, so it's important to prevent its abuse. Earnings stripping involves shifting profits from high-tax countries to low-tax areas or tax havens to minimize taxes. Multinationals use this method by taking advantage of interest deductions in favorable tax regimes, which helps them lower their corporate tax payments. How Earnings Stripping Works For example, let's say Company A operates in Country ABC, where the tax rate is 35%. To reduce its tax, Company A creates a subsidiary, Company X, in Country XYZ, where the tax rate is only 10%. Company X gives a loan to Company A, which then records high-interest expenses. By paying interest to Company X, Company A reports lower profits in Country ABC and higher profits in Country XYZ, reducing the group's overall tax liability. If not regulated, earnings stripping can reduce a country’s tax revenue. In Nigeria, where large companies are taxed at 30%, it's essential to prevent such tax avoidance practices. To address this, Nigeria has an anti-avoidance rule under the 7th schedule of CITA, which limits interest deductions on foreign related-party loans to 30% of a company’s Earnings Before Interest, Tax, Dividend, and Amortization (EBITDA). Any excess interest can be carried forward for up to 5 years, after which it is no longer deductible. This rule helps reduce fictitious loans among related companies that try to shift profits to countries with lower tax rates than Nigeria. Have a great day ahead.

Don't Question Your Capability At some point in our careers or personal lives, many of us have questioned our own capabilities and skills. This is often driven by a common factor—self-doubt. However, as we know, the antidote to self-doubt is self-confidence. To be honest, we’ve all experienced moments of self-doubt, and it's something most of us can relate to. It’s natural to have days when we question our progress, our achievements, and even our ability to keep up with those around us. There will be times when we feel like imposters, wondering if we’re good enough or capable of succeeding. These feelings can be overwhelming, but it’s important to remember that many of us haven’t fully explored our capabilities. Sometimes, we need to push ourselves beyond our comfort zones to truly understand what we are capable of achieving. This week, let’s remind ourselves that we are our own greatest cheerleaders. We should put our best effort into everything we do and not let the opinions of others weigh us down. Let’s focus on doing our best for ourselves, not for anyone else. Remember, if we doubt our abilities, others may start to as well. So, stay confident, believe in your skills, and continue to push forward. Wishing you all a productive and fulfilling week ahead.

Tax Friday Question The VAT modification order of 2024 becomes effective from? A. September 2024 B. January 2025 C. October 2024 Please feel to share your answers. Do have a wonderful day ahead.

Excerpts from our Last Meet & Chat Session Last weekend, we had a tax expert review the recent changes in Nigeria's Fiscal Policies as well as share insights on government's intervention and economic recovery plans. The session commenced with our guest speaker emphasizing on what fiscal policies entail, the components as well as the effect and intent of fiscal policies and how monetary policy also act as a tool that government utilizes in stimulating growth in the economy. Our resource person then went ahead to explain the key considerations involved in formulating fiscal policies, the impact fiscal policies have on non oil revenue as well as some of the challenges the government faces in the implementation of fiscal policies. Furthermore, an analysis of the country's inflation rate, government's spending pattern and it's impact on the GDP was undertaken by our guest speaker Adeyemi Afolabi-Smith FCA,MBA,M.IoD,FIMC,FIDR, Bsc(Ed),AAT,ACTI,ACFE,CMC,CIP, The strategies utilized to restore parity in the economy ranging from the inauguration of the fiscal policy and tax reform committee, the various reforms proposed by the committee and the impact on some of the country's deficiencies was also discussed. The session was wrapped with participants contributing valuable ideas and our speaker responding to questions. The session was engaging and everyone got value for their time. Were you opportune to join the live session? Whether you were present or not, you can use the below link to access the record of the session for continuos reference and discourse on our various platforms. https://lnkd.in/g7wscrTj We have gotten a number of reviews from the session and would welcome your thoughts and ideas for continuos engagement on the topic discussed. Do have a great day.

Weekly Anonymous Sharing Today we have a community member seeking your advice on an intriguing career related issue. We look forward to diverse insights and opinion on the way forward. Thank you.

Happy 64th Independence day, Nigeria. As we mark another remarkable year, it's a time for us to take a reflection of where we are as a nation and what the future holds. Let us remember that it takes conscious effort from everyone to drive our nation forward. As a community, we charge everyone to contribute their quota towards the betterment of our dear country. Cheers to a greater Nigeria.

Opportunities Abound: How to Take Advantage and Thrive As professionals, we all know the importance of staying on top of our game. But in a constantly evolving industry, it can be difficult to know which opportunities are worth pursuing and which are not. However, it's crucial to utilize all opportunities that come our way, regardless of their size or significance. Right now, another opportunity is here: we are recommending five young professionals for a spot in Mentorship Corner 5.0 by Mentorship Corner International, which closes today. If you’re unsure whether this opportunity is worth your time, don’t hesitate—take the leap! The message here is clear you can't afford to be complacent in your career. You must always be on the lookout for new ways to expand your knowledge, build your networks, and advance your careers. Whether it's attending a Mentorship session with Mentorship Corner or joining a professional community like The Finance Business Partners by signing up on our website www.fbpcommunity.org because every opportunity has the potential to take you to the next level. If you're interested in being selected for this cohort, tell us in the comments why you should be chosen and how this opportunity will help enhance your career also include your email address P.S.: Recommendations close today, 30th September 2024. Don’t miss this chance to invest in yourself and your future. Seize every opportunity that comes your way, and take control of your professional journey. Qudus Adebowale Balogun Richard Okunola, CA

SEPTEMBER MEET AND CHAT WITH THE PROFESSIONALS In the midst of Nigeria's evolving fiscal policies, it's essential to have the right guidance to understand these changes. That’s why we’re excited to have Adeyemi Afolabi-Smith FCA,MBA,M.IoD,FIMC,FIDR, Bsc(Ed),AAT,ACTI,ACFE,CMC,CIP, an expert in fiscal policy and finance, leading this discussion. With his wealth of experience in economic analysis and fiscal, Adeyemi is perfectly positioned to break down these complex shifts and explain what they mean for professionals and businesses. Date: 28th September 2024 Time: 4 PM Meeting Link: https://lnkd.in/das_Jsaq This session is crucial for anyone looking to understand the real impact of these policy adjustments on the economy. Whether you're a business owner, finance enthusiast, or just curious about Nigeria’s fiscal direction, this is your chance to get practical insights from one of the best in the field. And yes, there will be a live Q&A, so come prepared with your questions! See you on Saturday as we learn together.