Forex Shortage: FIRS Asks Companies to Pay Dollar Debts in Naira

The Federal Inland Revenue Service (FIRS) has given a one-month window to companies with outstanding foreign currency tax liabilities to pay in Naira because of persistent forex scarcity.

The agency said in a statement emailed on Tuesday. The concession is just for a month and ends at the end of this month.

Nigerian producers struggled to secure enough dollars to import raw materials and settle taxes when oil prices plunged due the coronavirus pandemic in 2020. The Central Bank of Nigeria has rationed the supply of the U.S. currency and devalued the naira three times in the past two years.

While the crude price has soared to its highest levels since 2008 following Russia’s invasion of Ukraine, it’s yet to filter down into Nigeria’s dollar supply.

Nigerian authorities require companies to pay tax in the currency of the transaction. At the expiration of the one-month window, the tax agency “would no longer entertain any such requests” to settle the obligations in naira, it said.

The concession is available to all taxpayers with foreign currency liabilities due on or before Dec. 31, except companies in the upstream oil and gas sector, according to the agency. The naira payment will be based on the official exchange rate on the date of the transaction and or when the tax falls due, it said.