NIGERIA Law and Practice Contributed by: Tamuno Atekebo, Chinasa Unaegbunam, Naomi Kabowei and Favour Osayuwamen, Streamsowers & Köhn
2.3.7 Registration of Aircraft in Alternative Countries For private jets and charter aircrafts that are habitually based in Nigeria, popular alternative countries for reg - istration include San Marino and Bermuda. However, commercial aircraft habitually based in Nigeria must be registered in Nigeria. 2.3.8 Requirements for Documents Concerning Registration The Nig.CARs do not specifically stipulate that any document be in its original form. However, if any rel - evant document is in a language other than English, such document must be translated and must comply with the process for authentication of documents in the jurisdiction in which it was issued and/or notarised. 2.4 Lessor’s Liabilities 2.4.1 Tax Requirements for a Foreign Lessor Foreign lessors are subject to withholding tax at the rate of 10% on lease payments. Where the lessor is from a country that has a DTA with Nigeria, the with - holding tax payable will be subject to the terms of the DTA. DTAs do not exempt the payee from the payment of withholding tax in its entirety; rather, they adjust the applicable withholding tax on each transaction based on the agreed maximum rate prescribed in the DTA. Therefore, where the domestic withholding tax rate is lower than the one prescribed in the DTA, the domes - tic rate will apply. However, where the domestic rate is higher than the rate in the DTA, the DTA rate will apply. The tax withheld represents the final tax for non-res - ident lessors, and the obligation and liability to with - hold and remit lie with the local lessee. 2.4.2 Effects of Leasing on the Residence of a Foreign Lessor The sole act of leasing an aircraft will not create tax residency in Nigeria. Tax residency arises for individu - als on the basis of the length of time spent in Nigeria within a period of assessment and, for companies, arises upon incorporation. Foreign lessors may become liable for tax where such a lessor is a non-resident company and derives income from its Nigerian operation.
2.4.3 Engine Maintenance and Operations There are no laws in Nigeria that impose liability on a foreign lessor in respect of aircraft or engine mainte - nance solely on the basis of such lessor being a party to the lease agreement. It is usual for the parties to specify in their lease agreements the extent of the liabilities of each party. 2.4.4 Damage or Loss Caused by an Asset The doctrine of strict liability does not apply to a for - eign aircraft, engine owner or lessor under a lease, or financier financing an asset on lease, based on the fact that they hold such an interest. The Montreal Con - vention and the rules of that convention govern dam - age or loss occasioned by an asset in circumstances covered by the Montreal Convention. For other claims, Only properties owned by the lessee may be attached in satisfaction of a debt. Creditors of a domestic les - see cannot therefore attach a leased aircraft owned by a different entity in satisfaction of a debt. It is, how - ever, important that an owner registers its interest with the NCAA as notice to third parties that the aircraft is not owned by the lessee. 2.4.6 Priority of Third Parties’ Rights the general law of tort will apply. 2.4.5 Attachment by Creditors Nigeria made declarations under Article 39 (1) of the Cape Town Convention on International Interests in Mobile Equipment and its Protocol (the “Cape Town Convention”) to the effect that certain non-consensual rights will have priority over registered interests. These rights include: • liens in favour of workers for unpaid wages aris - ing since the time of a declared default under a contract to finance or lease the subject object for services performed relating to that object; and • liens in favour of repairers of an object in their pos - session to the extent of services performed on, and value added to, that object. These third-party rights will have priority whether or not the lease/lessor is registered in the Nigerian air - craft register.
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