Lafarge Africa Plc ("Lafarge" or "the Company") was subjected to a tax investigation by the Ogun State Internal Revenue Service ("OGIRS") spanning 2010 to 2014. OGIRS issued separate assessments at different times between 2019 and 2020. In January 2021, OGIRS issued another revised assessment, asserting its connection to the previous issuestriate income.
The Company appealed to the TAT, contending that OGIRS had violated the terms of the settlement agreement established after the 2020 assessment. Furthermore, the company challenged the 2021 assessment, arguing that it exceeded the prescribed six-year limitation period specified in section 55 of the Personal Income Tax Act ("PITA"). In addition to these objections, the company asserted that OGIRS had unlawfully delegated its responsibilities to a private entity, thereby rendering the assessment invalid.
TAT's decision
- The law imposed a 6-year limitation period for the issuance of assessments against a taxpayer after the expiration of the relevant year of assessment, except where the taxpayer had committed fraud, willful default or neglect.
- There was no binding agreement between the Company and the Tax Authority to restrict the Tax Authority from issuing additional or revised assessments.
- There is no statutory restriction on the delegation of the power of tax investigation
In view of the above, tax authorities are prompted to exercise diligence and timeliness when issuing assessments and pursuing potential tax liabilities from taxpayers. At the same time, taxpayers are encouraged to remain vigilant and enforce their rights, which includes a right not to be subjected to endless audits, outside the prescribed time in the law.
PwC is pleased to have represented the Company in this successful appeal.
Please see our tax Alert and the Tribunal decision below: