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1. Tax Alert – Personal Income Tax Residency Rules
2. Disclaimer Notice
3. Copyright Notice
Personal Income Tax Residency Rules
The controversy over which State Government is the relevant tax authority authorised to collect Personal Income Tax where the tax payer resides in one State but works in another State, or where the tax payer works in more than two State, during each year of tax assessment, has not abated with the passing into Law of the Personal Income Tax (Amendment) Act, 2011, Act No. 20 ("PITA Amendment").
Section 2 (1) (A) and (2) of the Personal Income Tax Act, CAP P8, Laws of the Federation of Nigeria, 2004 (''PITA'') provides that Personal Income Tax shall be paid for each year of assessment on the total income of every individual based on the State where the tax payer resides, in the relevant year of personal income tax assessment, and not based on where the individual tax payer works or carries on business.
The individuals excluded from the above PAYEE Residency Rule include Itinerant workers, persons employed in the Nigerian Armed Forces and Police other than in a civilian capacity, employees in the Nigerian Foreign Service, residents of the Federal Capital Territory, Abuja and Nigerians residing outside Nigeria but deriving income or profit from Nigeria. With the exception of itinerant workers who work from place to place, all other persons mentioned in this exception to the Residency Rule are obligated to fulfil their tax obligations to the Federal Government of Nigeria (represented by the Federal Inland Revenue Service).
Tax Payee and Multiple Residences
An individual tax payer's place of residence under the Personal Income Tax Act is the place where such an individual lives or uses as his residence most frequently in Nigeria. A tax payer's residence does not include his hotel room, vest-room or office place at which he may be temporarily lodging.
However, for individuals with multiple residences, Section 32 of the Personal Income Tax (Amendment) Act, 2011 has amended the First Schedule to the principal Personal Income Tax Act – which is on the determination of individual tax payer's residence - by inserting a new sub-paragraph (d) after paragraph 1(c). The new sub-paragraph 1(d) provides that "in the case of an individual who works in the branch office or operational site of a company or other body corporate, the place at which the branch office or operational site is situated : provided that operational site shall include Oil Terminals, Oil Platforms, Flow Stations, Factories, Quarries, Construction Sites with a minimum of 50 workers, etc."
Itinerant Workers
An itinerant worker is an individual who moves from one place to another place in the performance of his employment contract or in the provision of services.
Section 31 of the Personal Income Tax (Amendment) Act, 2011 amended the description of a Itinerant worker in Section 108 of the Personal Income Tax Act to now include individuals, irrespective of their status, who work at any time in any State during a year of tax assessment for wages, salaries or livelihood, by working in more than one such State, but works for a minimum of twenty (20) days in at least three (3) calendar months of every year of the personal income tax assessment in at least one of such States.
Section 2 (b) of the Personal Income Tax (Amendment) Act, 2011 has now inserted a new sub-section 1(A) to the principal Personal Income Tax Act, and the insertion now authorises the relevant tax authority in the State where the itinerant tax payer works for a minimum of twenty (20) days in at least three (3) months of the relevant year of assessment to collect Personal Income Tax from the itinerant worker.
Conclusion
The ability of the various State Governments and the Federal Government to properly apply the residence rule, and the itinerate workers rule, will be gravely hampered by the lack of a reliable public data on the residence and movement of tax payers and their place of work, at each given tax assessment and payment period. Building reliable public and private data bases that are interconnected is therefore very crucial to minimising tax avoidance practices in Nigeria.
Presented by:
Oserogho & Associates
Business Solicitors, Tax Advisers & Notary Public
NEC Centre, 1 Engineering Close
2nd Floor, Suite 206, Off Idowu Taylor Street
Victoria Island, Lagos, Nigeria
Phone/Fax: (+234-1) 463 7414
Office Phone: (+234-1) 765 5635
Mobile: (+234-1) 803 326 4753;
P. O. Box 56261 Falomo Ikoyi Lagos
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.
Website: http://www.oseroghoassociates.com/
1. Tax Alert – Minimum Tax and Dormant Companies
2. Disclaimer Notice
3. Copyright Notice
Tax Alert - Minimum Tax and Dormant Companies
General Introduction
The inability of many global economies to come out of recession has resulted in redundancies and more closure of businesses without these businesses necessarily going through liquidation or winding up proceedings.
There are also companies that were registered and have remained dormant without the owners being aware that the dormancy of their companies attracts minimum tax and minimum corporate affairs commission compliance requirements.
This Tax Alert is an introduction to the Minimum Tax provisions for all registered companies in Nigeria.
Introduction to Minimum Tax
According to the Federal Inland Revenue Service, Minimum Tax is justifiable on the premise that every asset generates income. The Minimum Tax regulations is therefore a anti- tax avoidance measure which is charged whether or not the affected company declares a profit, or the company was dormant during the relevant year of tax assessment.
Where a company is dormant, Minimum Tax is usually charged on the company's net asset or on its share capital, whichever is higher of the two.
Minimum tax legislation
The Companies Income Tax Act (as amended) provides that where in any year of assessment, the ascertainable profits of a company, from all sources, results in a loss or where the company's ascertainable profits results in no tax been liable for payment, or where the tax payable is less than the statutory minimum tax allowable, such a company shall be liable to be charged and to pay a statutory minimum tax, which amount will be dependent on whether the company has a annual turnover of less than N500,000, or more than N500,000.
A company with an annual turnover of N500,000 or less, that has been carrying on business for at least four (4) years, is liable to charge to a Minimum Tax of any of the higher of the following sums:
(i) 0.5 per cent of the company's gross profit; or
(ii) 0.5 per cent of the company's net assets; or
(iii) 0.25 per cent of the company's paid up share capital; or
(iv) 0.25 per cent of the turnover of the company for the relevant year of tax assessment.
Where however, the turnover of the company is more than N500,000, the minimum corporation tax payable shall be the higher of the above rates that is charged for companies with an annual turnover of N500,000 or less, plus 0.125 (or fifty per cent) on the excess of the turnover that is above N500,000 will be charged as Minimum Tax.
Exemption from Minimum Tax Regulations
Companies that are involved in agricultural production or businesses, with companies that have not carried on business during the first four years of their incorporation, or companies that have at least twenty-five per cent imported equity capital fully paid for by a foreign company, are among the exempted corporations to whom the minimum tax provisions stated above do not apply.
Capital Allowances and Minimum Tax
For each year of assessment in which Minimum Tax is payable, the capital allowance for that year shall be computed together with any unabsorbed allowances brought forward from previous years, and these shall be deducted as far as possible from the assessable profits for the relevant financial year, and carried forward.
Any unabsorbed portion of the capital allowances of a company are allowed to be carried forward to the next financial year.
Dormant Companies and Minimum Tax
The general perception that dormant companies are not liable to pay any tax at all as they are not engaged in any trade or business is not correct. As a tax-avoidance measure, Minimum Tax is charged on the higher amounts of such a dormant company's gross profit, or its net assets, or its paid-up share capital, or its turnover, at the rates stated above. The only exemptions to this rule are as also stated above.
To avoid penalties for non-compliance, owners of companies that are dormant for any reason, or are not making any profits, will do well to contact their Tax Advisers for compliance in order to avoid tax penalties that could finally liquidate such companies.
DISCLAIMER NOTICE. This Legal Alert is a free educational material, for your general information and enlightenment purposes ONLY. This Alert, by itself, does not create a Client/Attorney relationship between yourself and our Law Firm. Recipients are therefore advised to seek professional legal advice and counselling to their specific situations when they do arise.
COPYRIGHT NOTICE. This Legal Alert is protected by Intellectual Property Law and Regulations. It may however be shared with other parties provided that our Authorship is always acknowledged and this Disclaimer Notice is attached.
Oserogho & Associates
Business Solicitors, Tax Advisers & Notary Public
NEC Centre, 1 Engineering Close
2nd Floor, Suite 206, Off Idowu Taylor Street
Victoria Island, Lagos, Nigeria
Phone/Fax: (+234-1) 463 7414
Office Phone: (+234-1) 765 5635
Mobile: (+234-1) 803 326 4753;
P. O. Box 56261 Falomo Ikoyi Lagos
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.
Website: http://www.oseroghoassociates.com/
Legal Alert – June 2012 – Limited and General Partnerships
 
In this Issue
1. June 2012 – Limited and General Partnerships.
2. Copyright and Disclaimer Notices.
3. Subscribe and Unsubscribe.
Introduction
Partnership is one of the most common forms of establishing a business in Nigeria. The culture of sustaining long-term Partnerships that thrives and outlive their original partners have however remained mostly a mirage in Nigeria.
This educational Alert is our contribution to the enlightenment process on the provisions of the Partnership Law and how they may affect your business, if you elect to go into one (or are already in a Partnership).
What is a Partnership?
Many States in Nigeria, pre and post independence, adopted the English Partnership Act as a statute of general application. Some States like Lagos State adopted this Law with some modifications.
The Lagos State Partnership Law describes a Partnership to be the relationship which exists between people, carrying on business otherwise than as a limited liability company or incorporated trustees, with the sole objective of making and sharing profits.
The Lagos State Partnership Law preserves the rules of equity and common law already applicable to partnerships provided that these rules are not inconsistent with or in conflict with the express provisions of the Lagos State Partnership Law.
What is a Limited Partnership?
What is a limited partnership holds the most curiosity to a twenty-first century entrepreneur exploring the best way(s) of structuring his or her business(es).
The Lagos State Partnership Law provides that a Limited Partnership must not consist of more than twenty (20) people, and must have one or more General partners who shall bear the debts, liabilities and other obligations of the Partnership.
Unlike a General Partner, a Limited Partner is not liable for the debts of a Partnership beyond the amount that he or she has contributed to own equity in the Partnership. Where however, a Limited Partner draws out or receives back any portion of his equity contribution to a Partnership, such Limited Partner shall in such circumstance be liable for the debts and other related obligations of the Partnership up to the amount so drawn out or received back.
Registration of Limited Partnerships?
Every Limited Partnership that carries on business in Lagos State is obligated to register such a Limited Partnership with the Registrar of Limited Partnerships in Lagos State.
The implication of the failure of a Limited Partnership not registering such a partnership while carrying on business in Lagos State is that each and every Limited Partner will be deemed in Law to be a General Partner liable for the debts and other obligations of the Partnership.
Any changes in the registration details of a Limited Partnership must be communicated and registered with the Registrar of limited Partnerships in Lagos State within seven (7) days of the consummation of such change. The penalty for default in communicating and registering the change, to/with the Registrar of Limited Partnerships, is a fine, which on conviction will not exceed N2.00k (Two Naira) for each day during which the default continues.
Also, any change in the status of a General Partner or in the assignment of the equity of the General Partner to a Limited Partner must be immediately advertised in the Lagos State Government Gazette; and until such change is advertised in a Gazette, the change or arrangement or transaction shall have no effect in Law.
Roles of Limited Partners
A Limited Partner shall not take part in the day-to-day management of a partnership's business or businesses. A Limited Partner shall also not have the power to bind the Partnership and where he breaches any of these provisions, the Limited Partner shall be liable for the debts of the partnership as though he were a General Partner.
A Limited Partner or his appointed agent however has the right to inspect the books of the partnership, with its operational state and prospects, and to advise the Partners managing the partnership business accordingly.
The Powers of General Partners
Every General Partner is an agent of the Partnership and of his other Partners ("the firm"); and therefore can bind himself and his Partners with regard to the business of the firm unless there is a clear intention or agreement that a General Partner has no authority to act for the Firm in a particular matter or matters.
Where one Partner pledges the credit of the Firm for a purpose which is unconnected with the Firm's ordinary course of business, the Firm shall not be bound by such pledge unless the Firm specially authorised the Partner concerned to pledge the credit of the Firm.
Liability of Partners
General Partners are jointly liable for all the debts and other obligations of the Firm incurred while they remain Partners of the Firm. On the death of any Partner, he or her estate shall be severally liable for such debts and obligations so far as they remained Partners when those obligations accrued, and the debt remained unpaid after the demise of such a Partner.
Where a General Partner acting within the scope of his or her authority, or the Firm itself, receives third party income or property, and misappropriates or misapplies such income or property, the Firm itself and each General Partner shall be jointly and severally liable for the injury and loss suffered by the third party.
Also, any person who represents himself or holds himself out to members of the public as a Partner of a Firm shall be liable as a General Partner to any person who relies on such misrepresentation and suffers a loss in consequence thereof.
The liability for "holding out" however does not apply to actions that occur after the demise of the "holding out Partner" or to the deceased person's estate.
New Partners admitted into an existing Partnership are not liable to the creditors of the Firm for anything done before the new Partner joined the Firm. In equal measure, a Partner that retires from a partnership does not by his retirement cease to be liable for the partnership's debts incurred while he or she was still a Partner of the Firm except if there is an express agreement with the remaining Partners and Creditors discharging the retiring partner from these kinds of obligations.
Corporate Governance & Partnerships
DUTY TO ACCOUNT. Each Partner is bound by Law to render to the other Partners of the Firm a true and honest and full account, with other materials, on all aspects of the Partnership business.
Each and every Partner is also required to account to the other Partners of the Firm for any benefit or private profit derived by such Partner from any partnership business or related business, or from the use of the partnership property, name or business connections, without the consent or knowledge of the other Partners of the Firm.
DUTY NOT TO COMPETE. Each and every Partner is also obligated not to compete with the Firm by carrying on any business of the same kind or nature as that or those carried on by the Firm. Where a Partner breaches this rule, such a Partner shall be personally liable to account to and pay over to the other Partners all the profits and benefits made by him or her from such similar competing business.
Dissolution of Partnerships
Subject to any express agreement, a Partnership can be dissolved in any of the following ways:-
(a) If it is entered into for a fixed term, by the expiration of that term.
(b) If it is entered into for a single venture or undertaking, by the completion or termination of that undertaking or venture.
(c) If it is entered into for an undefined period of time, by any of the Partners giving notice to the other Partners of his intention to dissolve the partnership or retire from the partnership.
A Partnership could also be dissolved by the death, bankruptcy or charge of the assets of a Partner for such a Partner's private debts.
Other grounds for dissolving a Partnership include where a Partner is adjudged to be a lunatic or to be a person of unsound mind; or where his conduct is prejudged by a Court of Law to be to the prejudice of the entire partnership business.
A Notice of the dissolution of a Partnership published in the Lagos State Government Gazette, and in any newspaper with wide circulation in the area of Lagos State where the Partnership carries on business shall be sufficient notice to the members of the public of such dissolution of the Partnership.
Partnership Property on Dissolution
On the dissolution of a Partnership, every Partner is entitled to, as against the other Partners of the Firm, have the Partnership properties applied in the payment of all the partnership debts and liabilities, with the surplus assets or income applied, after deducting each Partner's own debt to the Firm, to the payment of any winding up surplus revenue to the Partners of the Firm.
The death, bankruptcy or lunacy of a Limited Partner shall not be a ground for dissolving a Partnership unless the Limited Partner's equity in the Partnership cannot be ascertained and realised.
A Limited Partner does not have the right to dissolve a Partnership while a General Partner can, subject to the terms and conditions of the Partnership Agreement, serve notice of the dissolution of the Partnership.
DISCLAIMER NOTICE. This Legal Alert is a free educational material, for your general information and enlightenment purposes ONLY. This Alert, by itself, does not create a Client/Attorney relationship between yourself and our Law Firm. Recipients are therefore advised to seek professional legal advice and counselling to their specific situations when they do arise. Questions, comments, criticisms, suggestions, new ideas, contributions, etc are always welcomed with many thanks.
COPYRIGHT NOTICE. This Legal Alert is protected by Intellectual Property Law and Regulations. It may however be shared with other parties provided that our Authorship is always acknowledged and this Disclaimer Notice is attached
Subscribe & Unsubscribe to Legal Alerts
This Alert and others produced by us are provided without any charge to you and without the creation of a client-attorney relationship. You can always subscribe to it, on behalf of other interested persons from whom you have their permission, by sending to us a one line e-mail with the words "Subscribe – Legal Alerts" followed by the desired email address.
You are equally free to terminate your subscription by sending to us a one line email with the words "Unsubscribe - Legal Alerts" and your electronic address would be removed from our list. In the future, you can return to our mailing list by visiting our web site www.oseroghoassociates.com to subscribe for the Legal Alerts.
Oserogho & Associates
Business Solicitors, Tax Advisers & Notary Public
NEC Centre, 1 Engineering Close
2nd Floor, Suite 206, Off Idowu Taylor Street
Victoria Island, Lagos, Nigeria
Phone/Fax: (+234-1) 463 7414
Office Phone: (+234-1) 765 5635
Mobile: (+234-1) 803 326 4753; (+234-1) 765 5635
P. O. Box 56261 Falomo Ikoyi Lagos
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.
Website: http://www.oseroghoassociates.com/
Legal Alert – May 2012 – Admissibility of Electronic Evidence
 
In this Issue
1. May 2012 – Admissibility of Electronic Evidence
2. Copyright and Disclaimer Notices
3. Subscribe and Unsubscribe
Introduction
The inestimable benefits of the various advancements in information and communication technologies have until the enactment of the new Evidence Act in 2011 remained a matter of much debate and judicial uncertainty.
Tendering of electronic mails ("emails") for example are usually as contentious and acrimonious as the litigation itself, with the opposite party usually relying on the hearsay rule, among other forms of objections under the old Evidence Act 1945, to prevent the admission of such electronically generated evidence.
The enactment of the Evidence Act, 2011 has attempted to correct some of the difficulties that the admissibility of electronically generated evidence do encounter in Nigerian Courts.
However, is the general perception that all electronic communication and mails are now admissible in Nigeria, correct? This Legal Alert is our contribution to the enlightenment process on the provisions of the 2011 Evidence Act regarding the admissibility or otherwise of electronically generated evidence.
Admissibility of Evidence Generally
Relevant to the admissibility of electronic evidence are the common rules governing the admissibility of evidence generally. Some of these common rules need mention in this Alert.
Under Nigerian Law, facts which are in issue, with the facts which are relevant to the facts in issue, are generally admissible in evidence.
In the 1945 Evidence Act which is now repealed, technologically generated evidence was argued to offend some of the following general rules of evidence:
(i) The issue of the custody and the reliability of the evidence tendered if it is not the original document.
(ii) The best evidence rule which requires that a party must produce the original document during a trial or where the original document is not available, secondary evidence of it in the form of a copy, with other corroborating notes, etc, must be produced.
(iii) The rule against the admission of hear-say evidence which forbids witnesses giving evidence on facts that they do not directly or personally witness or know about.
The underlined words above are for emphasis only.
The general basis for the admissibility of documentary evidence has not radically changed under the Evidence Act 2011 as documentary evidence is still mostly admissible where the original hard copy of such a document is produced in a Court of Law. See Section 83(1) of the Evidence Act 2011. The Evidence Act 2011 has however expanded this basis general rule to enable the admission of electronically generated documents under certain conditions which are enumerated hereunder.
Explanatory Memorandum – Evidence Act, 2011
In its explanatory Memorandum, the Evidence Act, 2011 repealed the 1945 Evidence Act, Cap. E14, Laws of Federation of Nigeria, and enacted a new Evidence Act, 2011 which latter Act applies to all judicial proceedings in or before any Court of Law in Nigeria.
Starting with some definitions, this Alert will follow with some succinct highlights of the provisions of the Evidence Act, 2011 as they relate to electronic communication, electronic information, court processes, decided cases, etc, in Nigeria.
Definitions of "Document, "Computer", Evidence
Section 258 (1)(d) of the Evidence Act, 2011 describes a document, for the purpose of this Legal Alert, to include "any device by means of which information is recorded, stored or retrievable including computer output''.
A Computer is in turn described to be "any device for storing and processing information, and any reference to information being derived from other information is a reference to its being derived from it by calculation, comparison or any other process.''
Evidence itself has generally been described by authors to be "the means by which facts are proved, excluding inferences and arguments'.
2011 Evidence Act, Hearsay and Electronic Evidence
Under the new Evidence Act 2011, one of the exceptions to the hearsay rule of evidence, which hearsay evidence will otherwise be inadmissible under the old repealed 1945 Evidence Act, is the provision that where even though the maker of the evidence cannot be called to give primary evidence on the "hearsay evidence", such evidence is established to have been made and kept contemporaneously in an electronic device, in the ordinary cause of business or in the discharge of a professional duty or in acknowledgement, written or signed, of the receipt of money, goods, securities or of property of any kind. See Section 41 Evidence Act, 2011.
Where the statement and the recording of the transaction are not instantly contemporaneous, they must occur such that a Court of Law will consider it most likely that the transaction was at the time of the record, still fresh in the memory of the maker of the recorded statement.
Admissibility of Documents produced by a Computer
Section 84 of the Evidence Act 2011 provides that a statement contained in a document produced via a computer, which statement is relevant to the facts in issue, is admissible as evidence on the fulfilment of the following conditions precedent:-
(a) The computer from which the document was produced, was used regularly during the material period to store electronic information or to process information of the kind stated in the document;
(b) The computer from which the document was produced also had stored in it other information of the kind contained in the document or of the kind from which the information contained in the document was derived;
(c) That throughout the material period, the computer was operating properly; and where it was not, evidence must be provided to establish that during the period when the computer was not operating properly, the production of the document or the accuracy of its contents were not compromised or affected;
(d) That the information in the statement is reproduced or derived from the information supplied to the computer in the ordinary course of the activities in question.
Certificate Authenticating Computer Generated Documents
Section 84(4) of the Evidence Act 2011, provides that where it is desirable to give a statement in evidence by virtue of Section 84 of the Evidence Act 2011, a Certificate identifying the document containing the statement and describing the manner in which the document was produced, with the particulars of any device involved in the production of the document, signed by a person occupying a responsible position in relation to the operation of the electronic device, shall be primary and sufficient evidence of the matters stated in the Certificate.
Primary and Secondary Electronic Evidence
Primary documentary evidence is the original document itself produced for the inspection of the Court. Secondary evidence is the direct opposite of primary evidence.
Section 86 (3) (d) of the Evidence Act 2011 provides that where a number of documents have all been produced by one uniform process as in the case of printing, lithography, photography, computer or other electronic or mechanical process, each of such documents shall be the primary evidence of the contents of all the documents so produced by this one uniform process.
Electronic Signatures
An electronic signature will satisfy the legal requirement that a document must be signed where the electronic signature shows that a procedure was followed whereby the person that executed a symbol or followed some other security procedure for the purpose of verifying that an electronic signature was made to an electronic record, actually followed such an established procedure. See Section 93 (1-3)
Admissibility of other forms of Evidence
BOOKS OF ACCOUNTS. Also admissible under the new Evidence Act, 2011 are entries in books of accounts or electronic records of such books of accounts regularly kept in the ordinary course of business. However, Section 51 of this Law provides the caveat that such statements alone shall not be sufficient evidence to discharge any person of liability. See Section 53.
PUBLIC BOOKS. Any entry in any public or other official books, register or record including electronic records made by a public servant in the discharge of his official duties, stating a fact in issue or a fact relevant to a fact in issue, are now admissible evidence under the provision of Section 52 of the Evidence Act 2011.
Electronic Evidence and the Burden of Proof in Civil Cases
The burden of proof in civil cases lies on the person who would fail if no evidence at all were given or provided on either side to establish a claim or claims.
Also remember that the burden of proof in civil cases is discharged on the balance of probabilities and not beyond reasonable doubt which is the burden of proof required in criminal proceedings. See Sections 132 and 134 of the Evidence Act 2011.
Presumption and Estoppel
One of the presumptions under the Nigerian law of Evidence is that an electronic message forwarded by the originator of the message through an electronic mail server corresponds with the message as fed into his computer for transmission. But the Court shall not make any presumption as to the person to whom such message was sent without corroborating evidence. See Section 153(2) of the Evidence Act.
Lagos State Rules of Civil Procedure
It is arguable that Lagos State has the most revolutionary High Court Civil Procedure Rules in twenty-first century Nigeria. There are however no direct provisions in the High Court of Lagos State (Civil Procedure) Rules 2004 ("Lagos Civil Procedure Rules") regulating the electronic filing and service of court processes.
Order 6 of the Lagos Civil Procedure Rules requires that all originating processes should be printed in A4 paper of good quality. Order 7 of the said Rules requires personal service of all court processes and where personal service is not possible, physical hard copies with the leave of Court can be served by pasting at the last known address of the party with the Process Server required to swear to an Affidavit of Service exhibiting the acknowledgement of the court process that was served.
Order 32 Rules 1 and 4 of the Lagos Civil Procedure Rules requires that real evidence shall be tendered during trial. Where depositions are required, they must be written with the witness available for examination and cross-examination in open Court. Order 32 Rule 6 of the Lagos Civil Procedure Rules however allows the admission of official copies of court processes filed at the High Court as original copies of the filed court processes.
Case Law on Electronic Evidence in Nigeria
The earliest and most commonly referred to case on the admissibility of electronic evidence in Nigeria is the Nigerian Supreme Court decision in Esso West Africa Inc. v. T. Oyegbola (1969) 1 NMLR 194 where the Supreme Court said obiter that "The law cannot be and is not ignorant of modern business methods and must not shut its eyes to the mysteries of the computer".
The document that called for the decision of the Court in the Esso West Africa Inc. matter was one that was signed in quadruplicate with carbon copies through one single process with the original copy. The Supreme Court ruled on this matter, relying on the old Section 93 of the 1945 Evidence Act to hold that where a number of documents have been made by one single act of the use of carbon paper, each of such document so reproduced is primary evidence of the other quadruplicate copies.
The Esso West Africa Inc. v. T. Oyegbola case was referred to in the case of Yesufu v. A.C.B. (1976) 4SC (Reprint) 1 @ 9-14 where the document that was tendered with objection by opposing Legal Counsel, was a bank statement prepared by a Machinist from the Ledger Card of the Respondent Bank; the Machinist obtained the entries from the Respondent's Bank day-to-day Vouchers. The bank officer that tendered the statements did not personally prepare the statements or verify that the statements were correct. Objection was raised to the admissibility of the bank statements on the grounds that the existence of a banker's book from which the entries were extracted was not established neither was the custody and control, with the examination of the original entries established, before the lower Court admitted the bank statements.
The Supreme Court held in the Yesufu v. A.C.B case that the admission of the bank statements which entries were derived from the day-to-day vouchers of the Respondent bank did not qualify, without other supporting oral evidence, as a bankers book and therefore offended the provisions of Section 96 (1)(h) of the 1945 Evidence Act.
The Supreme Court did however refer to the obiter in Esso West Africa Inc. (supra) and said as follows ".... it would have been much better, particularly with respect to a statement of account contained in a book produced by a computer, if the position is clarified beyond doubt by legislation as has been done in the English Civil Evidence Act, 1968."
It is the provision of Section 5 of the English Civil Evidence Act 1968 regarding the conditions precedent for the admissibility of documentary evidence produced by a computer that were finally adopted in the 2011 Evidence Act as counselled by the Supreme Court in the 1976 case of Yesufu v. A.C.B (supra).
In another Supreme Court decision of Elizabeth Anyaebosi v. R. T. Briscoe (1987) 3 NWLR (part 59) 84 @ 96-97, the statement of account upon which the claims in this suit was reproduced and upheld were stored in and reproduced from a computer. This statement of account was admitted in evidence without objection at the High Court and in the Court of Appeal. The Supreme Court on further appeal upheld the judgements of the lower Court to the effect that the computerised statement of account were admissible under Section 96 (1) and (2) of the now repealed Evidence Act 1945 which section allows the admission of secondary evidence upon the fulfilment of certain conditions precedent. This is in contrast with some kind of evidence which are absolutely inadmissible under Nigerian law.
In the case of Oguma Associated Companies (Nig.) Ltd v. I.B.W.A Limited (1988) 1 NSCC 395 @ 413 the Nigerian Supreme Court said obiter that Nigerian Courts need to become circumspect in interpreting Section 96 of the 1945 Evidence Act in the light of modern day banking procedures and gadgets such as computers which are now increasingly used by businesses. The Supreme Court also said obiter that there are certain types of evidence such as hearsay evidence, unstamped and unregistered documents which are inadmissible in Law and which cannot be admitted by consent of the parties.
It was held in the Oguma Associated Companies case that while the correctness of whether the statement of account was rightly or wrongly rejected by the lower Court as there was no cross-appeal on this point, other admissible and uncontradicted evidence were provided to entitle the Respondent Bank to judgment. This appeal was accordingly dismissed.
Conclusions
There are typographical errors in the Evidence Act 2011. These minor typographical errors will have to be corrected at the first opportunity of any amendment to this legislation. See examples of these errors in Sections 71 and 206.
The subject of evidence and the admissibility of documents have remained a very technical subject for many years. The Evidence Act 2011 continued with this tradition by failing to simplify the evidence rules for both legal practitioners and non-legal practitioners, to easily read and understand the provisions of this Law.
Lastly, we adopt and recommend to you the conclusions of Zachary G. Newman and Anthony Ellis in their article entitled "The Reliability, Admissibility and Power of Electronic Evidence" published on January 25, 2011 in the Litigation Section of the American Bar Association Journal to the effect that "Electronic evidence is becoming more and more prevalent in lawsuits. Therefore, significant time should be devoted to identifying and analysing the authentication and admissibility issues relative to the electronic data involved in the litigation. Addressing these issues at the earliest possible phase is critical to a successful evidentiary presentation on summary judgement, at a hearing or at trial.
The groundwork for establishing the authenticity and admissibility should begin as soon as the information is gathered and reviewed as additional discovery may be required to ensure that the electronic evidence can be used in Court."
DISCLAIMER NOTICE. This Legal Alert is a free educational material, for your general information and enlightenment purposes ONLY. This Alert, by itself, does not create a Client/Attorney relationship between yourself and our Law Firm. Recipients are therefore advised to seek professional legal advice and counselling to their specific situations when they do arise. Questions, comments, criticisms, suggestions, new ideas, contributions, etc are always welcomed with many thanks.
COPYRIGHT NOTICE. This Legal Alert is protected by Intellectual Property Law and Regulations. It may however be shared with other parties provided that our Authorship is always acknowledged and this Disclaimer Notice is attached
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Oserogho & Associates
Business Solicitors, Tax Advisers & Notary Public
NEC Centre, 1 Engineering Close
2nd Floor, Suite 206, Off Idowu Taylor Street
Victoria Island, Lagos, Nigeria
Phone/Fax: (+234-1) 463 7414
Office Phone: (+234-1) 481 1014; (+234-1) 765 5635
Mobile: (+234-1) 803 326 4753; (+234-1) 765 5635
P. O. Box 56261 Falomo Ikoyi Lagos
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.
Website: http://www.oseroghoassociates.com/
Legal Alert – April 2012 – Hotels & Tourism Licensing and Regulatory Regimes
 
In this Issue
1. April 2012 – Hotels & Tourism Licensing and other Regulatory Regimes in Nigeria
2. Copyright and Disclaimer Notices
3. Subscribe and Unsubscribe
Introduction
The global financial crises in the last few years, the necessity to diversify the Nigerian economy away from oil, and improvements in the purchasing power of the Nigerian middle class, among other factors, have encouraged increased private investments in the leisure, hospitality and tourism industries in Nigeria.
A proper understanding of the various federal, state and local government licensing and regulatory regimes in the Hotels, Hospitality and Tourism markets in Nigeria is critical to the execution and substance of a viable business plan in any of these sectors. This Legal Alert is our contribution to your achieving this objective.
Federal Hotel & Tourism Regulation
At the federal tier of government, the apex regulatory authority is the Nigerian Tourism Development Corporation ("NTDC") which is established by law to register, classify and grade all hospitality and tourism establishments, travel agencies and tour operators in Nigeria.
Every Owner of every hospitality and tourism establishment in Nigeria is therefore mandatorily required to register its business with NTDC within sixty (60) days of its commencement of operations. Every certificate of registration issued by NTDC expires on the thirty-first (31st) day of December in the year of the issue of such a certificate; with renewals required on a year to year basis upon the payment of such renewal fees as may be prescribed by NTDC.
The Owner of every registered hospitality or tourism establishment must display in a prominent place, at its business premises, its NTDC certificate of registration indicating the name of the establishment, its classification and the grading status of the tourism and or hospitality establishment.
There are fines and criminal penalties for individual owners and corporate bodies who fail to register their hotels, tourism and hospitality establishments with NTDC.
Lagos State Hotel and Tourism Licensing Law (as amended)
For operators of Hotels, Tourism and Events establishments in Lagos State, attention is brought to the Lagos State Hotel Licensing Law as amended in 2010 ("LSHLL"). This Law regulates the licensing of Hotels and other Tourism Establishments in Lagos State.
It is an offence under the LSHLL for an operator of a Hotel or other Tourism Establishment to carry on any of these kinds of businesses in Lagos State without a licence duly issued by the Lagos State Hotel Licensing Authority ("LSHLA"). The penalties for non-registration include fines and terms of imprisonment.
Like the NTDC Act, the Lagos State Hotel Licensing Law (as amended) also requires all operators of Hotels and Tourism Establishments in Lagos State to display in prominent sections of their Hotels their LSHLA license.
Grounds for Objection to Hotel License
The Lagos State Hotel Licensing Law (as amended) introduced among other things an objection procedure to the granting of, renewal and transfer of any license issued by the LSHLA to a Hotel or Tourism Establishment operator.
Grounds for objecting to a LSHLA license include (a) closeness to places of religious worship, schools or a hospital; (b) the use of the premises where the establishment carries on business as a brothel; (c) the population density of the area where the Hotel or Tourism Establishment is located or intended to be located; (d) the operator of such an establishment is found to be a person of bad repute or a tax defaulter or a convicted person under the LSHLL; or (e) the premises is unsanitary or will be a nuisance to the neighbourhood where it is situated.
Lagos State Hotel Proprietors Law
There is also in Lagos State a Hotel Proprietors Law which regulates the rights, duties and liabilities of all Hotel Proprietors to the customers who patronise the services offered in Hotels in Lagos State.
Duty of Care
Under the Hotel Proprietors Law, it is the duty of a Hotel Proprietor in Lagos State to take reasonable care of the safety of its customers such that each customer is not injured by the negligence or omission of the Hotel Proprietor, its staff and agents.
Extent of Liability
Where a Hotel Proprietor is found to be liable for any loss or damage to the property of a customer brought into its Hotel, such a Hotel Proprietor's liability is limited to N200 (Two Hundred Naira) in respect of any one article or N2,000 (Two Thousand Naira) for the aggregate of all the customer's items lost or damaged.
A Hotel Proprietor is however not liable for motor cars or vehicles that get missing while parked within the premises of the Hotel except if it is established that a independent and separate contract indemnifying the customer against the loss of his motor car or vehicle was entered into with the customer.
Every Hotel Proprietor is mandatorily required to have a notice exhibited conspicuously at the entrance or reception area of its Hotel, and also in the sleeping rooms, intimidating customers of the Hotel that the Hotel Proprietor's liability is limited to N200 (Two Hundred Naira) in respect of any one article or N2,000 (Two Thousand Naira) for the aggregate of all the customer's items lost or damaged while a fee paying Guest at the Hotel.
Hotel Proprietor's Lien
The Lagos State Hotel Proprietor's Law re-establishes the age-long legal principle that a Hotel has a legal right of lien to detain any of its customer's property where the customer does not settle his or her Hotel bill, for services the customer enjoyed while at the Hotel. This right of lien does not however apply to the apparels worn by the customer at the time the Hotel Proprietor exercises its right of lien.
The Hotel Proprietor further has the right to dispose of the detained property if after twelve (12) weeks of an advertised public auction, the customer continues to fail to settle his or her Hotel bill.
Local Governments' Permits and Licenses
There are other various Permits and Licenses which a Operator of a Hotel must also apply for from the Local Government Authority in the area where its carries on business; and ensure the renewal of these permits and licenses at all times while carrying on business.
Some of the Local Government Permits and Licenses applicable to Hotel operations in Nigeria, with minor variations from one State to another, include permits for food, liquor license, radio and television license, fire and safety permit, fumigation, sewage and food handlers' licenses, Tenement Rate or Land Use Charge on the property where the Hotel carries on business, ETC.
Hospitality & Tourism Tax Laws
Companies Income Tax
As most Hotels, Hospitality, Tourism and other leisure establishments are incorporated limited liability companies, they are required to pay thirty per cent (30%) of their annual profits as companies' income tax and two per cent (2%) as education tax at the end of each trading or financial year.
Related to the above provisions is the requirement to file annual returns with accompanying audited accounts at the end of each financial year, at the Corporate Affairs Commission.
Personal Income Tax
All Hotels, Hospitality and other leisure establishments are further required to ensure that they deduct the applicable personal income tax from their employee's wages and remit these PAYEE taxes to the State Inland Revenue Service where they carry on business. There are fines and other penalties for any defaults.
Value Added Tax
Value Added Tax in Nigeria is a federal legislation that charges a five per cent (5%) tax on all goods and services provided in Nigeria. Humanitarian goods and services are however exempted from charge to this tax by the Value Added Tax Act (as amended).
All persons including all Hotels, Hospitality, Tourism and other leisure establishments are required to include five per cent (5%) value added tax on all invoices that they issue to their customers. They are also required to file monthly VAT returns and remit the excess VAT where the output VAT exceeds the input VAT.
There are punitive penalties for any infringement of the provisions of the Value Added Tax Act (as amended).
Lagos State Consumption Tax Law
There is in Lagos State a consumption tax law which is very similar to the federal law on consumption tax, i.e. VAT. The Lagos State Law is known as the Lagos State Hotel Occupancy and Restaurant Consumption Law (as amended).
The Lagos State Hotel Occupancy and Restaurant Consumption Law (as amended) imposes a five per cent (5%) consumption tax on any customer who pays for the use of any facility, goods or services in any Hotel, Hotel facility, Restaurant or Events Centre in Lagos State.
The 5% Lagos State Consumption Tax however excludes from charge the already charged 5% federal Valued Added Tax and the traditional service charge invoiced in most entertainment and tourism establishments.
There are fines, interest charges and other penalties for non-collection and non-remittance of all Lagos State Consumption Tax in Lagos State.
Edo State Hotels, Events Centres and Restaurants Consumption Tax Law 2011
There is in Edo State, which is a Southern State in Nigeria, a Hotels and Events Centres Occupancy and Restaurants Consumption Law which imposes a 5% (five per cent) tax on the total invoice issued to a customer for all the consumable goods and for all the services rendered in all Hotels, Restaurants, Events Centres and other similar establishments in Edo State.
The consumption tax collected is required to be remitted to the Edo State Board of Inland Revenue. All Proprietors of the applicable Hotels and other leisure and entertainment establishments in Edo State are required to register their establishments with this Board of Inland Revenue, within sixty days (60) of their commencement of business, for the purpose of compliance with the provisions of this Law.
All consumption tax collected under this Law are required to be remitted to the Edo State Board of Inland Revenue on or before the 7th day of the following month of the collection.
Failure to register for the collection of this consumption tax, or to file monthly returns or to remit the consumption tax collected attracts penalties, fines and terms of imprisonment which could be imposed on the principal officers of the establishment if found guilty of committing any of these offences.
The Pension Reform Act (as amended)
The Pension Reform Act (as amended) requires all employers and employees, whether engaged in the public or private sectors of the Nigerian economy, to contribute a minimum of seven and a half per cent by the employer, and another minimum of seven and a half per cent by the employee, of the employee's monthly emolument towards the employee's mandatory pension scheme and plan.
There are penalties for breaching the various statutory provisions of the Pension Reform Act (as amended).
The Employee's Compensation Act 2010
The Employee's Compensation Act 2010, which repealed the Workmen Compensation Act, requires every employer, whether in the private or in the public sector of the Nigerian economy, to contribute to the Employees' Compensation Fund, which is managed by the National Social Insurance Trust Fund ("NSITF"), a compulsory employees' compensation contribution of one per cent of the employer's total monthly payroll.
There are fines and penalties for any breach of the provisions of the Employee's Compensation Act 2010.
Tourism and Hospitality Regulatory Disputes in Nigeria
The constitutionality of the concurrently existing Federal and State legislations on the registration of Tourism, Hotels and others Hospitality Establishments, especially in Lagos State, remains unresolved either by litigation or by legislative amendments to the existing laws.
The Contention of Lagos State Government
It is the contention of the Lagos State Government that the regulation of Hotels and other Tourism establishments is a residual matter to which the Federal Government of Nigeria has no constitutional authority to legislate or pass laws.
Lagos State further contends that the only reference to tourism in the exclusive legislative list of the 1999 Constitution of the Federal Republic of Nigeria (as amended) is in item 60(d) which relates "to regulate tourist traffic" and the intention here is to control immigration and monitor border formalities which later national security function is the exclusive responsibility of the Federal Government.
Based on the above assertion, the Lagos State Government contends that the only valid legislation that regulates the licensing of Hotels and other tourism or hospitality establishments operating in Lagos State is the Lagos State Hotel Licensing Law as amended in 2010.
Response of NTDC?
Neither the Federal Government nor NTDC have responded to the above advertised position of the Lagos State Government thereby placing the operators and customers of Hotels and other Tourism Establishments in Lagos State in a double registration and taxation position, which position will only increase the cost of doing business in Lagos State.
Without holding brief for the Federal Government of Nigeria or for NTDC, the latter's reliance on item 68 of the exclusive legislative list in the 1999 Constitution (as amended) which provides that any matter incidental to or supplementary to any matter in the exclusive legislative list will be construed to be on the exclusive legislative list, is an interpretation that is too wide and could not have being intended by the makers of this 1999 Constitution (as amended).
Conclusion
Until otherwise determined by a competent Court or by Constitutional amendment, it is our opinion that based on the existing 1999 Constitution (as amended), the Nigeria Tourism Development Corporation Act is null and void when it comes to the regulation of Hotels and other Tourism Establishments in Lagos State.
It would however be foolhardy for any operator of a Hotel or other Tourism Establishment operating in Lagos State to ignore registration with either NTDC or with the Lagos State Hotel Licensing Authority in the light of the cost-benefit of double compliance far outweighing non-compliance pending amendment to the existing laws.
In the nearest future, it is expected that the Federal and State Governments in Nigeria will harmonise all tourism and other hospitality legislations in Nigeria to ensure that investments in this industry are not inhibited by double taxation and resulting high costs of doing business in Nigeria.
Capacity building and enlightenment in the hospitality and tourism industry in Nigeria, with the fines and other penalties for non-compliance with current regulations, are behind those of countries with less tourism and hospitality potentials like Nigeria has. Private sector owners will do well to self-regulate this industry for maximum returns on their investments.
DISCLAIMER NOTICE. This Legal Alert is a free educational material, for your general information and enlightenment purposes ONLY. This Alert, by itself, does not create a Client/Attorney relationship between yourself and our Law Firm. Recipients are therefore advised to seek professional legal advice and counselling to their specific situations when they do arise. Questions, comments, criticisms, suggestions, new ideas, contributions, etc are always welcomed with many thanks.
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Subscribe & Unsubscribe to Legal Alerts
This Alert and others produced by us are provided without any charge to you and without the creation of a client-attorney relationship. You can always subscribe to it, on behalf of other interested persons from whom you have their permission, by sending to us a one line e-mail with the words "Subscribe – Legal Alerts" followed by the desired email address.
You are equally free to terminate your subscription by sending to us a one line email with the words "Unsubscribe - Legal Alerts" and your electronic address would be removed from our list. In the future, you can return to our mailing list by visiting our web site www.oseroghoassociates.com to subscribe for the Legal Alerts.
Oserogho & Associates
Business Solicitors, Tax Advisers & Notary Public
NEC Centre, 1 Engineering Close
2nd Floor, Suite 206, Off Idowu Taylor Street
Victoria Island, Lagos, Nigeria
Phone/Fax: (+234-1) 463 7414
Office Phone: (+234-1) 481 1014; (+234-1) 765 5635
Mobile: (+234-1) 803 326 4753; (+234-1) 765 5635
P.O.Box 56261 Falomo Ikoyi Lagos
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.
Website: http://www.oseroghoassociates.com/