The Double Taxation Relief (Taxes on Income) (Nigeria) Order 1987

Made: 26th November 1987

At the Court at Buckingham Palace, the 26th day of November 1987 Present, The Queen’s Most Excellent Majesty in Council

Now, therefore, Her Majesty, in exercise of the powers conferred upon Her by section 497 of the said Income and Corporation Taxes Act 1970, and of all other powers enabling Her in that behalf, is pleased, by and with the advice of Her Privy Council, to order, and it is hereby ordered, as follows:—

1

This Order may be cited as the Double Taxation Relief (Taxes on Income) (Nigeria) Order 1987.

2

It is hereby declared—

• (a) that the arrangements specified in the Agreement set out in the Schedule to this Order have been made with the Government of the Federal Republic of Nigeria with a view to affording relief from double taxation in relation to income tax, corporation tax or capital gains tax and taxes of a similar character imposed by the laws of Nigeria;

• (b) that those arrangements include provisions with respect to the exchange of information necessary for carrying out the domestic laws of the United Kingdom and the laws of Nigeria concerning taxes covered by the arrangements including, in particular, provisions about the prevention of fiscal evasion with respect to those taxes; and

• (c) that it is expedient that those arrangements should have effect.

SCHEDULE — Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Federal Republic of Nigeria for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and Capital Gains

The Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Federal Republic of Nigeria;Desiring to conclude an Agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains;Have agreed as follows:

Article 1 — Personal scope

This Agreement shall apply to persons who are residents of one or both of the Contracting States.

Article 2 — Taxes covered

Article 3 — General definitions

Article 4 — Fiscal residence

Article 5 — Permanent establishment

Article 6 — Income from immovable property

Article 7 — Business profits

Article 8 — Shipping and air transport

Article 9 — Associated enterprises

Article 10 — Dividends

Article 11 — Interest

Article 12 — Royalties

Article 13 — Capital gains

Except as provided in Article 8 of this Agreement (Shipping and air transport), each Contracting State may tax capital gains in accordance with the provisions of its domestic law.

Article 14 — Independent personal services

Article 15 — Dependent personal services

Article 16 — Directors' fees

Directors' fees and other similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors of a company which is a resident of the other Contracting State may be taxed in that other State.

Article 17 — Artistes and athletes

Article 18 — Pensions and annuities

Article 19 — Government service

Article 20 — Students and trainees

Article 21 — Teachers

Article 22 — Elimination of double taxation

Article 23 — Non-discrimination

Article 24 — Mutual agreement procedure

Article 25 — Exchange of information

The competent authorities of the Contracting States shall exchange such information (being information which is at their disposal under their respective taxation laws in the normal course of administration) as is necessary for carrying out the provisions of this Agreement or for the prevention of fraud or for the administration of statutory provisions against legal avoidance in relation to the taxes which are the subject of this Agreement. Any information so exchanged shall be treated as secret and shall not be disclosed to any persons other than those (including a court or administrative body) concerned with the assessment, collection, enforcement or prosecution in respect of taxes which are the subject of this Agreement. No information shall be exchanged which would disclose any trade, business, industrial or professional secret or trade process.

Article 26 — Diplomatic agents and consular officials

Article 27 — Entry into force

Each of the Contracting States shall notify to the other the completion of the procedures required by its law for the bringing into force of this Agreement. The Agreement shall enter into force thirty days after the date of the later of these notifications and shall thereupon have effect:

• (a) in the United Kingdom:

• (i) in respect of income tax and capital gains tax, for any year of assessment beginning on or after 6 April in the calendar year next following that in which the Agreement enters into force;

• (ii) in respect of corporation tax, for any financial year beginning on or after 1 April in the calendar year next following that in which the Agreement enters into force;

• (iii) in respect of petroleum revenue tax, for any chargeable period beginning on or after 1 January in the calendar year next following that in which the Agreement enters into force;

• (b) in Nigeria:

• (i) in respect of withholding tax on income and taxes on capital gains derived by a non-resident, in relation to income and capital gains derived on or after 1 January in the calendar year next following that in which the Agreement enters into force;

• (ii) in respect of other taxes, in relation to income of any basis period beginning on or after 1 January in the calendar year next following that in which the Agreement enters into force.

Article 28 — Termination

This Agreement shall remain in force indefinitely but either Contracting State may terminate the Agreement, through the diplomatic channel, by giving notice of termination at least six months before the end of any calendar year. In such event, the Agreement shall cease to have effect:

• (a) in the United Kingdom:

• (i) in respect of income tax and capital gains tax, for any year of assessment beginning on or after 6 April in the calendar year next following that in which the notice is given;

• (ii) in respect of corporation tax, for any financial year beginning on or after 1 April in the calendar year next following that in which the notice is given;

• (iii) in respect of petroleum revenue tax, for any chargeable period beginning on or after 1 January in the calendar year next following that in which the notice is given;

• (b) in Nigeria:

• (i) in respect of withholding tax on income and taxes on capital gains derived by a non-resident, in relation to income and capital gains derived on or after 1 January in the calendar year next following that in which the notice is given;

• (ii) in respect of other taxes, in relation to income of any basis period beginning on or after 1 January in the calendar year next following that in which the notice is given.

Signed

G.I. de Deney — Clerk of the Privy Council

Explanatory note

(This note is not part of the Order)

The Agreement with the Federal Republic of Nigeria is set out in the Schedule to this Order.

The Agreement provides for business profits not arising through a permanent establishment to be taxed only in the country of the taxpayer’s residence. Profits attributable to a permanent establishment may be taxed in the country in which the permanent establishment is situated (Articles 5 and 7). Profits or gains arising from the operation of ships and aircraft in international traffic are to be taxed only in the country of residence of the operator (Article 8).

Income from immovable property may be taxed in the country in which the property is situated (Article 6). Capital gains may be taxed by either country in accordance with its domestic law (Article 13).

The rate of tax imposed in the country of source on dividends derived by a resident of the other country is not to exceed 12½ per cent where the recipient is a company controlling at least 10 per cent of the voting power in the company paying the dividends, and 15 per cent in all other cases (Article 10).

The rate of tax imposed in the source country on interest is, in general, not to exceed 12½ per cent. However, interest arising in one country and paid to the Government or any governmental agency of the other country is to be exempt in the country of source (Article 11).

The rate of tax in the source country on royalties flowing to the other country is not to exceed 12½ per cent (Article 12).

The earnings of temporary business visitors are, subject to certain conditions, to be taxed only in the country of the taxpayer’s residence (Articles 14 and 15).

Government service salaries and pensions are normally to be taxed by the paying Government only, while other pensions, subject to the provisions specified, are to be taxed only in the country from which the pension is derived (Articles 18 and 19). Income derived by artistes and athletes may be taxed in the country where the activities are exercised (Article 17). The remuneration of visiting teachers and certain payments made to visiting students and trainees are to be exempt from tax for specified periods in the country visited (Articles 20 and 21).

Where income continues to be taxable in both countries credit will be given by the country of the taxpayer’s residence in respect of tax imposed by the other country. The credit to be given in the United Kingdom for tax payable in Nigeria includes credit for tax spared under certain provisions of Nigerian law (Article 22).

There are provisions safeguarding nationals and enterprises of one country against discriminatory taxation in the other country (Article 23) and for consultation and exchange of information between the competent authorities of the two countries (Articles 24 and 25).

The Agreement is to enter into force on the thirtieth day after exchange of notifications by the two countries that their respective legislative procedures have been completed and to take effect in the calendar year next following that in which it enters into force (Article 27).

Footnotes

[^f00001]: 1970 c. 10; section 497 was amended and extended by sections 98(2) and 100(1) of the Finance Act 1972 (c. 41), section 10 of the Capital Gains Tax Act 1979 (c. 14) and section 70 of the Finance Act 1987 (c. 16).