Section 30(1)(b) of the Companies Income Tax Act (CITA) empowers FIRS to assess a company to tax on a fair and reasonable percentage of turnover where it appears to FIRS that the company either has no assessable profits or assessable profits that are less than expected or the profits of such companies cannot be ascertained. This is called a Deemed Profits Assessment [DPA].
In 2015, FIRS directed all foreign companies with Nigerian operations to file tax returns based on their actual profits in line with section 55 of CITA. A foreign company complied with this directive but had no tax payable based on its actual returns. FIRS disregarded the actual returns and issued a DPA to which the company objected and appealed to the TAT. The Tribunal upheld the FIRS assessment without due consideration to facts adduced in evidence and whether FIRS validly exercised its discretion.
Find out more here: Download PwC Tax Alert_TAT upholds deemed profits assessment_March2021