WHAT ARE THE TAX DISPUTES IN NIGERIA AND HOW CAN IT BE RESOLVED
Tax disputes in Nigeria are primarily resolved by the courts and the Tax Appeal Tribunal. The Constitution of the Federal Republic of Nigeria, 1999 (as amended) and the Taxes and Levies (Approved List for Collection) Act, LFN 2004 provide for the assessment and collection of taxes by the federal, states and local governments. The jurisdiction of the courts over tax disputes derives from whether the taxes are federal, state or local government taxes. Jurisdiction over taxes administered at both the federal and state levels, such as stamp duties, is determined by the legal personality of the taxpayer and for individuals, their place of residence.
Tax disputes and appeals in Nigeria are governed by the relevant provisions of the Nigerian tax laws, including the Companies Income Tax Act, Value Added Tax Act, Personal Income Tax Act, Petroleum Profits Tax Act, and Federal Inland Revenue Service (Establishment) Act, among others.
Tax Dispute Resolution Processes
1. Administrative Resolution.
The first step in resolving a tax dispute is through the administrative process. Taxpayers who disagree with a tax assessment or decision of the tax authority (Federal Inland Revenue Service or State Inland Revenue Service) can lodge a complaint with the relevant tax authority within 30 days of receipt of the assessment or decision. The tax authority will review the complaint and issue a decision within 30 days.
2. Alternative Dispute Resolution (ADR).
If the taxpayer is dissatisfied with the administrative resolution, they can opt for ADR. ADR provides a platform for taxpayers to negotiate and settle their disputes with the tax authority without going to court. The ADR process is voluntary and can be initiated by either the taxpayer or the tax authority.
3. Tax Appeal Tribunal (TAT).
If the ADR process is unsuccessful, the taxpayer can appeal to the TAT. The TAT is an independent body established by the Federal Government of Nigeria to hear and determine tax disputes arising from the decisions of the tax authorities. The TAT is composed of a chairman and four members, and it has the power to subpoena witnesses, order the production of documents, and make enforceable decisions.
4. High Court Appeal.
If a party is dissatisfied with the decision of the TAT, they can appeal to the Federal High Court or the State High Court, depending on the level of the dispute. The appeal must be lodged within 30 days of the TAT’s decision.
CONCLUSION
In summary, taxpayers in Nigeria have several avenues for resolving tax disputes and appeals, including administrative resolution, ADR, the TAT, and High Court appeal. It is advisable for taxpayers to seek the advice of a qualified tax professional before embarking on any of these processes to ensure the best possible outcome.
Tax disputes in Nigeria stem from various issues, including multiple taxation, tax evasion, arbitrary assessments by tax authorities, misinterpretation of tax laws, and non-compliance by individuals and corporate entities. These disputes, if not properly managed, can lead to prolonged legal battles, financial losses, and strained relationships between taxpayers and tax authorities. Moreover, unresolved tax conflicts can discourage investments, hinder business operations, and negatively impact government revenue generation.
To address these challenges effectively, Alternative Dispute Resolution (ADR) has emerged as a viable mechanism for resolving tax disputes efficiently and amicably. ADR methods such as negotiation, mediation, arbitration, and the Tax Appeal Tribunal provide taxpayers with a less adversarial, cost-effective, and time-efficient means of settling disputes. Unlike litigation, which is often time-consuming and expensive, ADR promotes flexibility, confidentiality, and mutually beneficial outcomes for all parties involved.
The Nigerian government and tax authorities must continue to strengthen ADR frameworks by ensuring transparency, enhancing public awareness, and fostering collaboration between tax regulators and taxpayers. By doing so, the tax dispute resolution process can be improved, leading to increased voluntary compliance, reduced tax-related conflicts, and a more business-friendly environment. Ultimately, a well-functioning ADR system for tax disputes will contribute to economic growth, enhance investor confidence, and ensure the effective collection of government revenue while safeguarding