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Executive summary

Pursuant to her powers under Section 61 of the Federal Inland Revenue Service (Establishment) Act, 2007, the Minister of Finance, Budget and Planning, Mrs. Zainab Shamsuna Ahmed, approved the Tax Appeal Tribunal (TAT) (Procedure) Rules, 2021, (the Rules), which are retroactively effective from 10 June 2021.

The Rules are projected to govern the modalities and procedures of the TAT. They are specifically intended to facilitate an effective litigation management system and accelerate the determination of tax-related matters. The Rules promote the use of (1) electronic filing, (2) service systems and (3) proceedings for tax-related matters. In addition, they provide directions for appellants, among others, to make applications to the TAT.

The Rules’ objectives are to enable the TAT to deal justly, fairly, and expeditiously with appeals and to encourage and promote the settlement of disputes amongst parties.

The enactment of the Rules also replaces the TAT (Procedure) Rules No. 42 of 2010. Actions taken based on the provisions of the revoked Rules, however, would remain valid to the extent that the actions are consistent with the provisions of the Rules.

The below summarizes relevant provisions of the Rules.

Detailed discussion

Major provisions of the Rules

The Rules allow an aggrieved person or a relevant tax authority (RTA) to:

  • File an appeal on an assessment, demand notice, action, or decision of an RTA within 30 days of the receipt date of the assessment, demand notice, action or decision that is being appealed (i.e., action taken by the taxpayer)
  • File an appeal against a taxpayer at the appropriate zone of the TAT (the Zone) where in its opinion, such taxpayer is non-compliant i.e., action taken by the RTA)

Before an appeal is heard, taxpayers are expected to pay 50% of the disputed amount into a designated account of the TAT. That amount will stand as security for prosecuting an appeal.

An appeal will begin in the Zone from which an assessment, demand notice, action or decision originated. Any appeal commenced in the wrong Zone will not be heard but will be transferred to the appropriate Zone upon the direction of the Zonal TAT Chairman.

Appeals may be filed electronically as prescribed by the TAT. Also, hearings (submissions by both parties in the dispute; the appellant and respondent) and the delivery of rulings may be held virtually as directed by the TAT.

The time frame upon which an appeal is to be heard, concluded and the ruling delivered must not exceed six months from the date the appeal is commenced. The TAT may approve a different time frame for the appeal process.

On an application of appeal from a party or “Suo motu,” the TAT may review and correct, rescind or vary its decision if (1) it is satisfied that the earlier decision reached contains ambiguity, patent error or omission, or (2) the decision was obtained by fraud.

The legality of the Rules

The Rules are generally guidelines that have the force of law and are expected to direct the form, manner, and order of adjudication at the TAT, according to the principles of law and the rules laid down by the TAT.

Notwithstanding that the Rules have the force of law, they do not have the same weight as statutes in Nigeria. As such, the validity of the Rules’ provisions are upheld only to the extent that they were made within the confines of the relevant laws.

In areas of conflict between the Rules and their enabling statutes (in this instance, the tax laws i.e., the Companies Income Tax Act and the Federal Inland Revenue Service Establishment Act), or the Nigerian Constitution, the Rules will not have the force of law to the extent of any such inconsistency.

Implications

The enactment of the Rules by the Federal Government is commendable as it seeks to amend some old definitions, give better clarity on certain terms and processes, and further introduce certain provisions, such as electronic applications, virtual hearings, delivery of rulings amongst others, to align with the current realities.

However, certain provisions of the Rules, such as the payment of 50% of the disputed amount before the commencement of an appeal may discourage aggrieved persons who ordinarily would have wanted to initiate an appeal on a decision or an assessment, especially where such persons are not financially capable of paying that amount. As a result, the Minister may need to review the Rules to ensure the Rules’ objectives are achieved.

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For additional information with respect to this Alert, please contact the following:

Ernst & Young Nigeria, Lagos

Ernst & Young Société d’Avocats, Pan African Tax – Transfer Pricing Desk, Paris

Ernst & Young LLP (United Kingdom), Pan African Tax Desk, London

Ernst & Young LLP (United States), Pan African Tax Desk, New York

 

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