In practice, FIRS may disallow capital allowances claimed on fixed assets if the appropriate Certificate of Acceptance for Fixed Assets "CAFA" has not been obtained from the Industrial Inspectorate Department.
In addition, the Financial Reporting Council of Nigeria (FRCN) recently published rules which prohibit the recognition of transactions in the financial statements of a company if such transactions require regulatory approvals that have not been obtained. CAFA falls into this category of transactions and potentially means that a company may not be able to recognise its non-current assets in the financial statements unless CAFA has been granted for the relevant financial periods.
Although it is difficult to see any useful purpose being served by this regulatory approval, it is nonetheless important for companies to comply in order to avoid potential tax exposures and sanctions by the FRCN.
Read our tax alert for more: Download PwC Tax Alert_Acceptance Certificate for Assets_Aug 2016
Copies of letter from Ministry of Trade and FRCN Rules for reference:
Download Sample letter from IID on CAFA compliance
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
