Tax & Business Matters - Nigeria

TAT rules on the employer’s exposure to penalties and interest and its jurisdiction on state laws

In a series of judgements released by the Tax Appeal Tribunal (TAT) in April, the Tribunal has emphasised the employer’s exposure to penalties and interest where it defaults in its obligations to calculate, deduct and remit the applicable tax on  employees’ emoluments. The common appellant in all 4 suits was the Lagos State Board of Internal Revenue (LSBIR” or “the Revenue”).

The TAT also ruled on its lack of jurisdiction to legislate on laws promulgated by the State Houses of Assembly. In the ruling, it was highlighted that liabilities in respect of strict State taxes and levies like the Development and Business Premises levies are outside the jurisdiction of the Tribunal. It is therefore important for taxpayers to carefully consider the issue of jurisdiction before instituting actions so that cases are not dismissed on technical grounds.

Please read our Tax Alert below:

Download TAT rules on the employer’s exposure to penalties and interest and its jurisdiction on state laws

Does Nigeria Need a Tax Crimes Commission?

The Nigerian National Assembly is currently deliberating on the  National Inspector General for Tax Crimes Commission, 2022 Bill (SB. 951 “the Bill"). As at 24 March 2022, the Bill had passed second reading and has been referred to the Committee on Finance for review and recommendations.

The Bill seeks to create a Commission which will perform certain activities, some of which already seem to be under the purview of the Federal Inland Revenue Service (FIRS). These include:

1. Address revenue leakages emanating from non payment and under payment of taxes;
2. Tackle irregularities in the assessment, reporting and remittances of taxes;
3. Prevent and “combat” tax related crimes;
4. Plug all leakages in the tax administration system; and
5. Ensure the protection of taxpayers’ rights.

Our publication summarises the Bill and highlights some of our key concerns with the proposed legislation. Please see our Tax Alert and the Bill below:

Download Tax Alert-Does Nigeria Need a Tax Crimes Commission

Download Tax Crimes Commission Bill

Tribunal rules on PAYE remittance and the service of objection letters

The Lagos State Board of Internal Revenue (LBIR) conducted an audit on Mega Trust Insurance Brokers Limited (MTIBL) and issued a demand notice for personal income tax, withholding taxes, development levies and business premises levies. LBIR alleged that MTIBL failed to object to the assessment within the 30-day period allowed by the Personal Income Tax Act (PITA), and subsequently issued a letter of intention to obtain a warrant of distrain. 

MTIBL argued that the individuals in respect of which the assessment was issued, were not its employees. The Company also argued that it had submitted an objection to a separate office of the LBIR, and that such should be considered to be valid objection.

Please read more in our Tax Alert below:

Download Tribunal rules on PAYE remittance and the service of objection letters

TAT holds that the payment of security deposit is not a condition precedent for the hearing of tax appeals

In June 2021, the Minister of Finance issued the Tax Appeal Tribunal (Procedure) Rules 2021 (the “Rules”). The Rules require the payment of a security deposit of 50% of the disputed amount into an account designated by the Tribunal. This provision was affirmed by the Tribunal in the case of Multichoice Africa Holdings B.V v FIRS.

 

The Tribunal held that the Rules were contradictory to Paragraph 15(7) of the FIRS Establishment Act (FIRSEA). The Rules make it mandatory for the Appellant to pay a security deposit of 50% of the disputed assessment before its appeal can be heard, while the FIRSEA vests the Tribunal with discretion to make an order for the payment of security deposits, only upon proof of certain conditions by the FIRS.

Read more in our Tax Alert here:

Download TAT holds that payment of security deposit is not a condition precedent for the hearing of a tax appeal