Nigeria’s Evolving Tax Dispute Resolution Landscape

The tax dispute resolution process (otherwise called the tax appeal system) will experience a healthy transformation if the proposed changes recommended by the Taiwo Oyedele-led Fiscal Reforms Committee are implemented. Feelers show that the Tax Appeal Tribunal (TAT or Tribunal) the administrative institution created under section 59 of the Federal Inland Revenue Service (Establishment) Act 2007 (FIRS Act) with mandate to adjudicate disputes and controversies arising from the operations of the legislations stipulated in the First Schedule to the FIRS Act will be re-established under a new law. The scope of its jurisdiction is expected to be expanded to expressly allow the Tribunal to adjudicate over State taxes strictly so-called, that is, taxes that are within the constitutional competence of the States (if any). This would be a great development.

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Under the Nigerian experience, taxing powers are intertwined with legislative competence. Recall that under the Constitution of the Federal Republic of Nigeria 1999 as altered (the 1999 Constitution), the States competence to legislate taxes is residual and therefore, as argued by some scholars, plenary. In other words, whilst the Federal Government has enumerated taxing powers as per the exclusive legislative list, concurrent legislative list does not enumerate items over which the States may enact tax laws. Hence, the power of the States to tax is said to be plenary.

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Back to the focus of this discourse - tax dispute resolution. ?In the evolving landscape of tax appeal system, in an age of rapid changes and reforms, tax appeal will assume even a greater premium position in tax administration. Frictions will continue to ensue as tax authorities seek to optimize tax collection and taxpayers, within the framework of tax planning and other legal confines, will always attempt to minimize their tax liability. The resultant frictions, except effectively managed through reconciliation and like schemes under the control of the tax authorities, will create necessities for administrative adjudication and possibly, litigation.

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Under Nigeria's legal system, the first level in tax dispute resolution or tax appeal outside the internal review mechanism of the tax man (which by reason of the decision in Oando Trading & Supply Ltd v FIRS,[1] has become optional and can be bypassed), is the Tribunal. With taxation becoming the viable alternative and perhaps the most sustainable revenue source for government expenditures, it is unlikely there will be an abatement in the frictions between the tax collectors and the taxpayers in the foreseeable future.

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To this end, to efficiently champion their clients' case, tax attorneys, tax advisers and accountants who are statutorily empowered to represent parties before the Tribunal ought to be more properly schooled in the nuances, mechanics, practices and procedures of the Tribunal in recognition of the fact that proceedings at the Tribunal are suis generis. The truth is even tax professionals including lawyers are not comprehensively familiar with the system of tax appeals, or comfortable presenting a tax case before the Tribunal. Knowledge of the tax and legal systems does not necessarily entail familiarity with the tax appeal procedures.

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It is in the interest of everyone to familiarize themselves with the processes, procedures and mechanics of the Tribunal. Expert-based learning experiences can complement the classroom-based coverage on tax dispute resolution thereby addressing limitations of the traditional doctrinal teaching curriculum. The integration of expert-based learning with the regular curriculum will surely provide opportunities to extend understanding of the law relating to tax dispute resolution.

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More will be said on this topic. Watch this space!

[1] Oando Supply & Trading Ltd v FIRS (1922 – 2014) 7 All NTC 383.

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