a.
XYZ Nigeria Limited

Computation of total tax liabilities for assessment year 2024

Assessment based on dividend
5% of 5,000,000 shares at N1.00 each = N250,000
CIT on dividend paid at 30% = N75,000

Given the fact that the tax liability based on total profit is higher than that based on dividend, the CIT payable is N12,604,500.

b.
Other bases of assessing companies to income tax in Nigeria apart from the normal basis are as follows:

i. Dividend assessment: Section 19 (1) of CITA 2004 (as amended) provides that where a dividend is paid out as profit on which no tax is payable due to:

• no total profits; or
• total profits which are less than the amount of dividend which is paid, whether or not the recipient of the dividend is a Nigerian company.

The provisions of Section 19 (1) shall not apply to dividends paid out of the retained earnings of a company, provided that the dividends are paid out of profits that have been subjected to tax under this Act, the Petroleum Profits Tax Act or the Capital Gains Tax Act.

ii. Minimum tax: is pegged at a flat rate of 0.5% of turnover less franked investment income, which would be applicable to the following companies;

• companies with no total profit, or
• whose computed tax is less than the minimum tax.

iii. Turnover assessment
For a trade or business, where the Revenue feels that the trade or business produces either no assessable profit or assessable profit that is less than expected of the trade or business or the true assessable profit cannot be ascertained, the Board may raise assessment on the following basis:

• if it is a Nigerian company, a reasonable percentage of the turnover; and
• if it is a non-Nigerian company, that part of the turnover attributable to the fixed base of the business or that part of the profit attributable to the business or trade carried on through a Nigerian representative.

c.
The five fundamental principles of ethics as specified by the International Ethics Standards Board for Accountants (IESBA) are as follows:

i. Integrity: A professional accountant shall comply with the principles of integrity, which requires an accountant to be straightforward and honest in all professional and business relationships.

ii. Objectivity: A professional accountant shall comply with the principle of objectivity, which requires an accountant not to compromise professional or business judgement because of bias, conflict of interest or undue influence of others.

iii. Professional competence and due care: A professional accountant shall comply with the principles of professional competence and due care, which requires an accountant to:

• attain and maintain professional knowledge and skill at the level required to ensure that a client or employing organisation receives competent professional service, based on current technical and professional standards and relevant legislation; and
• act diligently and in accordance with applicable technical and professional standards.

iv. Confidentiality: A professional accountant shall comply with the principle of confidentiality, which requires an accountant to respect the confidentiality of information acquired as a result of professional and business relationships.

v. Professional behaviour: A professional accountant shall comply with the principle of professional behaviours, which requires an accountant to comply with relevant laws and regulations, and avoid any conduct that the accountant knows or should know might discredit the profession.

A professional accountant shall not knowingly engage in any business, occupation or activity that impairs or might impair the integrity, objectivity or good reputation of the profession, and as a result would be incompatible with the fundamental principles.