An Assessment of the Nigerian Tax Appeal Tribunal and the Need for a Speedier and More Efficient System

Abstract

No doubt, the present tax appeal system in Nigeria is one that is saturated with unnecessary appeals on similar and identical issues of law and facts,[1] threat to its legitimacy,[2] perceived lack of fairness, loss of revenue to the government from incessant delays, and additional administrative costs.[3]

This author’s position is that the Nigerian tax and duty appeal systems must aim at speeding up appeals and reducing costs, particularly through active case management and a streamlined process. Contemporary modern day simplified tax appeal system demands that the Nigerian system must involve more transparency over and above that which currently subsists, by ensuring public access to decisions and the reasons for them. Thus, this paper argues for a tax appeal system that is independent of the government, with simple procedural rules that are adaptable and flexible. It starts by analyzing contemporary Nigerian tax appeals procedure and system relating to the Value Added Tax (“VAT”) as a specialized tax, within the context of the recently promulgated statutes: (a) Value Added Tax (Amendment) Act No 12 of 2007;[4] (b) Federal Inland Revenue Service (Establishment) Act No. 13 of 2007 (“FIRSEA”);[5] (c) Tax Appeal Tribunals (Establishment) Order of November 25^th, 2009 (TAT Order);[6] and (d) Tax Appeal Tribunal (TAT) Procedure Rules (2010) (“TAT Rules”)[7]—the tax appeal statutes.[8] It examines the appeals process starting from the issuance of the Assessment Notice by the Relevant Tax Authority (RTA) in Nigeria, to the initiation of the appeal before the TAT, the exercise of the power of distrain by the RTA, and to the exhaustion of all appeals by the an aggrieved party. It compares the substantive and procedural rules that govern the old VAT Tribunal against the current tax appeals rules governing the TAT. In concluding, it makes recommendations towards bringing the Nigerian tax appeal system at par with similar jurisdictions at common law.[9]

* Olumide K. Obayemi is admitted to the Bars of the State of California and Federal Republic of Nigeria. He is a Senior Lecturer with Lagos State University and Senior Counsel with Ajumogobia & Okeke, Lagos, Nigeria. I am eternally indebted to the Law Firm of Ajumogobia & Okeke for their scholarly atmosphere and for opening their library and other facilities for my use. Special thanks to Mr. Ovie Ukiri and Mr. Babatunde Sodipo for giving me an opportunity to work with Ajumogobia & Okeke. I dedicate this to Miss Olamide Monisola Obayemi and Mr. Olumide Kolawole Obayemi, II: Your standing with me and your faithfulness are my fondest, treasured, reassuring and ingrained memories—“You will never ever walk alone” and to the memories of my late parents: Pa Theophilus Olusegun Odunayo Obayemi and Dame Caroline Ojuola Arogundade-Obayemi.

[1]. Olumide K. Obayemi, The Tax Appeal Tribunal As an Instrument of Promoting Nigerian National Tax Policy: Revisiting NAOC vs FIRS and Shell vs FIRS, in Thisday Lawyer of Tuesday, February 25^th, 2015 at Page 13 (“Obayemi I”), where the court in the latter case of The Shell Petroleum Development Company of Nigeria Limited vs Federal Inland Revenue Service, Consolidated Appeal Nos: TAT/LZ/003/2014 & TAT/LZ/006/2014, followed its earlier ruling in Nigerian Agip Oil Company Limited vs Federal Inland Revenue Service,(2014) 16 TLRN 25, and, by this, promoted the rules of certainty and consistency in the interpretation and application of the Nigerian tax statutes.

[2]. See, e.g., TSKJ Construction International Sociadade Unipessonal Lda v Federal Inland Revenue Service (2014) 13 TLRN 1 and NNPC v Tax Appeal Tribunal (TAT) & Ors, (2014) 13 TLRN 39.

[3]. Olujimi Adedotun, Tax Appeal Tribunals – Slow Pace of Justice, in THISDAY NEWSPAPER of 8^th August, 2013. Available at: http://www.thisdaylive.com/articles/tax-appeal-tribunals-slow-pace-of-justice/155777/. Last visited on 24^th February 2015. (“Olujimi Adedotun”).

[4]. Value Added Tax (Amendment) Act No 12 of 2007 (“VAT Act 2007”).

[5]. Federal Inland Revenue (Establishment) Act No. 13 of 2007 (“FIRSEA”).

[6]. Tax Appeal Tribunals (Establishment) Order of November 25^th, 2009 (TAT Order).

[7]. Tax Appeal Tribunal (TAT) Procedure Rules (2010).

[8]. Under these statutes, the Nigerian Tax Appeal Tribunal (TAT) was established to replace the Value Added Tax (VAT) Tribunal that existed from 1993 to 2007 under Section 20 of the Second Schedule of the Value Added Tax Decree No. 102 of 1993 (“1993 VAT Act”).

[9]. The apparent independence and transparency of most of the systems is also noteworthy. Apart from the Taxation Review Authority in New Zealand, public hearings and public access to evidence and records of hearings seem to be the norm. Submission to the Consultation on the Reform of the Appeal System for Tax Matters by the Office of the Revenue Commissioners prepared by Irish Tax and Customs, at Page 2. Available at: www.revenue.ie/en/about/submission-reform-appeal-system.pdf. Last visited on February 6, 2014. (“Irish Submission”).