There are many accountancy firms in Nigeria, some of which represent a large proportion of the international accountancy networks, particularly in Abuja and Lagos. The ‘Big Four’ international accounting firms audit approximately 90% of listed companies while 15 national firms with international affiliation audit the remaining 10%. The main legal framework for corporate accounting and auditing practices in Nigeria is the Companies and Allied Matters Act. It requires financial statements from companies to comply standards set out by the Nigerian Accounting Standards Board. In addition listed companies have to comply with financial reporting and disclosure standards set out and regulated by the Securities and Exchange Commission (SEC) and the Nigeria Stock Exchange. With regard to the adoption of international accounting standards for Nigeria’s listed companies, financial statements have to be published in accordance with IFRS from years ending 31 December 2012.
There are three accountancy profession bodies in Nigeria: the Institute of Chartered Accountants (ICAN), the Association of National Accountants of Nigeria (ANAN) and Chartered Institute of Management of Nigeria (CIMA). ICAN is the leading professional body. ICAN members dominate accounting and auditing services in the private sector while ANAN members are mostly employed in the public sector. Currently, ICAN grants full membership after undergoing a special intensive course to all members of the British professional accounting bodies, and foreign bodies such as: the American Institute of Certified Public Accountants (AICPA), the Canadian Institute of Chartered Accountants (CICA), and the Institute of Chartered Accountants of Ghana (ICAG).
Nigeria is ranked 138th out of 183 for paying taxes behind a number of African countries such as, Mauritius (11th), South Africa (44th), Zambia (47th), and Ghana (90th), according to the World Bank’s Ease of Doing Business Index. The tax rate for companies other than those in the oil and gas industry is 30% as companies involved in petroleum operations pay Petroleum Profits Tax. For the first five accounting periods of a new company the Petroleum Profits Tax rate is 65.75%, for other accounting periods the tax rate is 85%. Capital gains tax is generally levied at 10%. There are various investment incentives available to foreign investors including: import concessions; tax exemptions for exported products; tax reductions for qualifying companies; and tax deductions for R&D expenses. The VAT rate is 5%; exempt goods and services include basic foodstuffs, medicines, medical devices and medical services, and exported goods and services. The Nigerian tax year is the calendar year. Financial statements must be prepared annually and filed with the Corporate Affairs Commission in accordance with the Companies and Allied Matters Act (1990).
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