Reflections – 4 April – 8 April 2022


THIS IS REFLECTIONS, our weekly roundup of events in the legal and technology sector, covering various topics and interesting learning points for today’s professionals.

If you couldn’t make an event, don’t worry, we probably made it and have all the juicy scoop for your reading pleasure and learning.

Do you have an upcoming event you would like us to know about or attend? OR do you know of one you would like to read about? Send an email to us HERE.



Property taxes have become more complex in recent years, with a variety of high-risk compliance difficulties. This webinar sheds light into tax issues in properties. In the Nigerian market, the value of commercial properties is constantly on the rise, and this is particularly the case for landed property and its attachments. Whilst the broad regulatory framework in many cases lies in the realm of state legislation, the most common tax-related legislations are federal. 


Tax is a compulsory payment levied by statute and payable on income, profit, gains, consumption and instrument.

The Regulatory framework for the taxation of commercial properties includes the following

Capital gains tax Act

Companies Income Tax

Personal Income Tax

Stamp Duties Act

Value Added Tax


The Companies Income Tax Act (CITA) is the regulatory framework for the taxation of income of companies in Nigeria.

Section 9 of the CITA provides that the profit of a company accruing in, derived from, brought into or received in Nigeria shall be liable to tax in Nigeria and this includes rent or any premium arising from the right granted to any person for use or occupation of any property shall be taxable in Nigeria.  Section 9(1)(b)) CITA.

A company engaged in the business of letting out a commercial property will basically have rental income as the source of its revenue. Where the company is the beneficial owner of such property, rent collected from the letting of properties will constitute the revenue. Where the company is the beneficial owner of such commercial property, rent collected from the letting of the property will constitute the revenue of the company in any year of assessment.

Where the company is not the beneficial owner of the vehicle but only receives agency fees for the management of the properties, only the management fees are received with respect to those properties that will be liable to tax. In cases where companies are engaged in the business of selling buildings, profits from such sales shall be liable to tax in the books of the company.

All companies including companies exempted from taxation must file tax returns with the FIRS on or before 6 months after its accounting year-end.

Gains on chargeable assets are liable to tax under the Capital Gains Tax Act at the rate of 10%.

The gains from which 10% CGT is deductible is the difference between the consideration accruing to any person on disposal of assets; and any allowable deductions from that consideration. Where such a company is in the business of rentals of commercial premises and disposes of one or all of its assets, this will be chargeable to tax under the CGTA and not under the CITA.

Where a person not in the ordinary trade of selling properties like land and building disposed of such chargeable asset on a one-off basis, then such disposal will be liable to capital gains tax.

Value Added Tax is chargeable on all goods and services except goods and services that are specifically exempted from VAT.

The VAT Act (as Amended) defines goods as “all forms of tangible properties, moveable immovable, but does not include land and building money or securities; and services anything other than goods and services provided under a contract of employment; and includes any tangible or incorporeal over which a person has ownership rights or from their derives a benefit and which can be transferred from one person to another excluding interest in land and building money or securities.

The VAT Controversy

The Finance Act 2019 and 2020 put an end to the controversies on whether the sale of commercial properties is liable to tax. Before the 2019 and 2020 Finance Act, the VAT was interpreted to be a catch-all provision, because the VATA of the old regime neither defined goods nor services.

It however defined “supply of goods” to mean any transaction where the whole property in the goods is transferred or where the agreement expressly contemplates that this will happen and in particular includes the sale and delivery of taxable goods or services used outside the business, letting of taxable goods on hire or leasing and any disposal taxable goods.   Which can include land and building.


The various interpretation of the VATA in relation to whether sales of landing and building and letting out of properties can be seen in FIRS circulars, espousing the FIRS position and judicial interpretations.


FBIR vs Ibile Holdings (2010): the defendant was in the business of building, selling and leasing properties for commercial purposes. The FBIR assessed its transactions to VAT and it was held by the now-defunct VAT Tribunal that the defendant’s transactions were taxable because they constituted a “supply of goods” in line with the definition in section 46 of the VAT.

Cnooc & Sapetro vs FIRS: SAPETRO assigned 90% of its PSC contractor’s interest to CNO0C. FIRS attempted to collect VAT from the transaction. CNOOC filed a suit at the Federal High Court (the “FHC”) challenging FIRS* decision. The FHC agreed with CNOOC that the transaction was not liable to VAT because PSC contractor’s interest was neither a good nor a service. The FHC held that PSC contractor’s interest consists of rights and therefore constituted incorporeal property. Based on the decision in CNOOC, taxpayers saw a refuge in challenging the FIRS as to the applicability of VAT to the sale of land and building.

Momotato v UACN Property Development Company Plc (2006): the judge held that the sale of land does not constitute a supply of goods, and therefore, is not liable to VAT. However, the judge clarified that services rendered in developing the land, such as sand filling, tarred road network

 electricity supply and SO on, should qualify as supply of services, and therefore liable to VAT. This suggests that the development of properties or the land can also be liable to VAT even though the land is not liable.

Letting and Leasing (Judicial Interpretation)

Essay Holdings v FIRS: delivered on 10 September 2020, the TAT sitting in Benin held that lease of real property, whether for commercial or residential purposes, does not amount to supply of goods and services. This relates to incorporeal property rights, which are outside the scope of the VAT Act.

Chief Ellah v. FIRS: delivered on 9 September 2020, the TAT sitting in Lagos held that commercial leases were subject to VAT. The TAT relied on the definition of “Supply of Goods” in VAT Act particularly on the phrase letting out of taxable goods on hire or leasing of taxable goods. The TAT also relied on the FIRS Information Circular 9701.

FIRS Interpretation: in FIRS Information Circular 9701, the FIRS stated that VAT is not applicable on rent on residential properties. Thus, deeming rent on properties used for commercial purposes subject to VAT, while rent on residential properties is not subject to VAT.

N.B. FIRS Circular is only FIRS opinion and not law.




The speaker started by mentioning that historically most Nigerian law firms started off as “one-man practices” or small partnerships, however time, larger partnerships have evolved, but in some cases, some firms still revolve around strong personalities.

He noted that great lawyers are not necessarily great marketers! BD is not taught in Law School and in fact the RPC frowns on any form of advertising or promotion unit is fair and proper and complies with the PC. in other words, Lawyers need help with business development.

He mentioned that most firms are will grappling with establishing proper processes or policies, with most firms still just “winging it’’. However, proper processes and policies are crucial for addressing issues such as:

  • Conflicts / onboarding/ KYC.
  • Time-keeping.
  • Appraisals/ promotions/ career journey/
  • Business development.

On what is Business Development, he mentioned that it means Pursuing strategic opportunities for the advancement of a particular business organisation, ideas, process, methods, and initiatives taken to improve a business.

Promoting serious business activities and initiatives with the air of reaching a defined target audience.

Business Development (“BD”) often includes the following:

  • Acquiring new partners and clients.
  •  Entering new markets.
  •  Developing new products or services.
  • Cross-selling/Upselling.

The speaker noted that for a law firm or a sole practitioner trying to develop BD processes, the firm should start by asking about the goals that every professional firm must satisfy.

  • Outstanding service to clients
  • Core/Professional satisfaction for staff
  • [Financial] Success to reward staff end to grow the business
  • Error to think that law firms compete only in the output market (for its services)

He mentioned that a good BD plan must therefore focus on both: Professional advancement and client acquisition/retention.

On Professional Advancement Plan (“PAP”), he noted that this involves a conscious activity to improve the technical abilities and professional reputation of a business in order to attract and retain clients and talents.

On tips to become recognized for professional proficiency and expertise:

  • Sponsoring major events helps a law firm stand out.
  • Speaking at international events.
  • Organizing seminars on specialist areas of law.

 Publicizing achievements: Publicizing achievements allows current and potential clients to know the areas of business the firm is excelling at.

Some tips on this include:

  • Headline

On client retention plans, the speaker noted that networking is important, as taking steps to create and develop a productive relationship with others can ultimately translate to the acquisition of new clients. The speaker also mentioned that social media is a great tool for business development and most firms are quite active on platforms like Linkedin. He also mentioned that upselling, cross-selling and referrals are great clients retention ways.



The webinar concentrated on the establishment of a law office and figuring out its management process.

For an effective law office management system, it is necessary that certain measures are taken while being established. A growth mindset is necessary for the process of management of a law office. The aspect of finance and funding is crucial in the development of a law office management system. Also, there is the Human Resources aspect, compensation, payroll and documentation.

Firstly, a business plan needs to be curated. This law office business plan outlines the aim, goals, and profits. Also, another consideration that is to be taken into account is whether it will be a one-man business or in form of a partnership when setting up a law office.

Another consideration is the billing processes for Clients.

This process is critical to the success of the law firm. It is equally time-consuming therefore it is important that there is a laid-out roadmap for this process. A bill is not just an invoice. It is a tool for communicating the value of what is to be offered to prospective clients. The billing process may come in form of a new client approaching the Law office, establishing his case, and after all considerations, the bill is given and where it is needed the bill or cost is adjusted. Then after negotiations where necessary, a final version of the invoice is given or sent out to the client. This process is time consuming therefore it is necessary that a laid down principle is made in order to avoid delays. Also, it is necessary to set out Invoice review, and Integration of the finance team with the billing process. Also, it is necessary for a law firm to set expectations with clients upfront about the firm’s billing process.

Also, another consideration in setting up a law office is the aspect of marketing and branding while abiding by the rules of professional conduct.

To achieve efficient management in the law office, there should be a properly documented procedure that reflects the core values of the law firm. The administrative and client services should be outlined and processes, if possible, automated for effective and efficient results.

Capital Gains Tax ActCompanies Income Tax Act (CITA)VAT Act

lawpavilion • April 26, 2022

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