A Critique of the Residence Rule in Nigeria Policy, Law and Administration

Residency is a key factor in taxation, since a taxpayer is generally liable to payment of taxes to the state where he is resident.

The issue of residency is a topical one that deserves additional discourse. It would appear that the residency rule which obligates a taxpayer to pay to the relevant tax authority of where he resides still stands; what has now been amended is the principal place of residence which should be considered when an individual has more than one residence. A challenge with this amendment was if camps, hotels or restrooms, provided for an oil company employee by his employer for instance, qualify under the PITAM as a principal place of residence, given the PITA that provides that a place of abode shall exclude these places. The provision in the PITA still stands. Furthermore, an employee who maintains dual residence would appear to have a right to exercise discretion as to where he declares as place of residence in his employment records with an employer; this appears to compound the problem. The employer is bound in remitting the employee's PAYE to the relevant tax authority, in line with the employee's emolument records, in accordance with the provision of the Operation of PAYE Regulations S.S. 18 of
2002 No.104 and PITA.

Chapter one looks at the introduction, the definition of the term residence and determination of tax base on residence

Chapter two looks at the place of residence, duration of residence, duration of non-resident, compulsory payment of illegal taxes

Chapter three looks at the residence of a company, basis of taxes liability on individual/ companies in Nigeria, the law of Residence before the federal inland revenue service , the law under the federal inland revenue service , taxation of non resident, disputes as to determination of residence .

Chapter four looks at the criticism of the residence rule, conclusion and recommendation

This paper intends to examine this important factor, the rules involved and whether it is still relevant to taxation of companies and individuals.