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What is the relevant legislation relating to tax administration and controversies? Other than legislation, are there other binding rules for taxpayers and the tax authority?

The relevant legislation is:

  • The Value Added Tax Act LFN 2004;
  • The Capital Gains Tax Act LFN 2004;
  • The Petroleum Profits Tax Act LFN 2004;
  • The Stamp Duties Act LFN 2004;
  • The Industrial Development (Income Tax Relief) Act;
  • The Casino Taxation Act LFN 2004;
  • The Personal Income Tax Act LFN 2004 only applicable in the Federal Capital Territory, Abuja;
  • The Federal Inland Revenue Service (Establishment) Act 2007;
  • The Companies Income Tax Act LFN 2004;
  • The Income Tax (Authorised Communication) Act LFN 2004;
  • The Deep Offshore and Inland Basin Production Sharing Contracts Act LFN 2004;
  • The Taxies and Levies Act LFN 2004;
  • The Education Tax (Amendment) Act LFN 2010; and
  • The Tax Appeal Tribunals Act (Establishment) Order, 2009.

Apart from than legislation, other binding rules include:

  • The Transfer Pricing Regulations, 2012;
  • The Annual Operating Levy Regulations, 2014;
  • The Nigeria Taxpayer Identification Number Regulations, 2014;
  • The Tax Administration (Self Assessment) Regulations 2011;
  • The tax authority powers to issue circulars advising or outlining taxpayer obligations; and
  • Judicial decisions.

Nigeria has double taxation treaties with the following 13 countries: Belgium, Canada, France, Italy, Mauritius, the Netherlands, Pakistan, the Philippines, Romania, South Africa, South Korea, Sweden and the United Kingdom.

Relevant authority

What is the relevant tax authority and how is it organised?

The Federal Inland Revenue Service (FIRS) is the tax authority at the federal level and in the Federal Capital Territory, Abuja. The focus here will be on the FIRS as the tax authority at the federal level. Each one of Nigeria’s 36 states has its own tax authority, responsible for administering and collecting state taxes; for instance, the tax authority for Lagos is the Lagos State Internal Revenue Service (LIRS).

Organisationally, the FIRS has offices across Nigeria, with its head office in Abuja. Its board, the Federal Inland Revenue Service Board, is charged with overall supervision of the FIRS and its daily running. The board consists of an executive chairman, who heads the board, assisted by six members appointed by the Nigerian President to represent the country’s six regions. The board also includes a representative (with the rank of director or above) from the Attorney General of the Federation (AGF), the Governor of the Central Bank of Nigeria and the Minister of Finance.

The FIRS’ organisational structure includes:

  • an investigation or intelligence department;
  • a standards and compliance department;
  • a field operations and support services department; and
  • a legal department.

There is also the Joint Tax Board (JTB) created to help improve tax administration across Nigeria; particularly harmonising the Personal Income Tax Act. This body is headed by the executive chairman of the FIRS and its membership comprises a member from each state nominated by the respective state’s governor. The other members include representatives of the Federal Road Safety Corps Commission (FRSC), Revenue Mobilization Allocation and Fiscal Commission (RMAFC), Federal Capital Territory Administration, Federal Ministry of Finance and the FIRS. The board’s function is to advise all tiers of government on tax matters, so as to evolve an efficient tax administration, resolve areas of conflict on tax jurisdiction among member states and promote uniformity in the application of tax laws and the incidence of tax on individuals.


Compliance with tax laws

How does the tax authority verify compliance with the tax laws and ensure timely payment of taxes? What is the typical procedure for the tax authority to review a tax return and how long does the review last?

The FIRS is responsible for administering the taxation of companies, wherever situated in Nigeria, and the taxation of individuals resident in the Federal Capital Territory.

Every company (whether or not it is liable to pay tax under the law) is required to file a self-assessment return with the FIRS in a prescribed form at least once a year. The return must contain the audited accounts, tax and capital allowances computation for the year of assessment and a true and correct statement in writing containing the amount of profit from each and every source computed; a completed self-assessment form, as prescribed by the FIRS, attested to by a director or secretary of the company and this should contain a declaration that it contains a true and correct statement of the amount of its profit computed in respect of all sources in accordance with the Companies Income Tax Act LFN 2004 and that the particulars given in such return are true and complete, together with evidence of payment of the whole or part of the tax due into a bank designated for the collection of the tax.

There is a timeline for filing company returns. For tax falling under the Companies Income Tax Act LFN 2004, if the company has been in business for more than 18 months, returns should be filed not more than six months after the end of its accounting year, and in the case of a newly incorporated company, within 18 months from the date of its incorporation or not less than six months after the end of its first accounting period, whichever is earlier. In addition, the returns form should be signed by a director who must be the chair or the managing director of the company and the secretary respectively.

For tax liable for VAT, returns must be filed on the 21st day of the month following the month of the transaction.

In the case of a withholding tax, tax returns must be filed within the statutory period of 21 days after the transaction.

Tax returns submitted as provided above are reviewed by a desk or field review. A desk review consists of a review of the material submitted by the taxpayer. Where a field review is considered to be necessary, tax inspectors visit the taxpayer’s premises and conduct a review of relevant material.

Types of taxpayer

Are different types of taxpayers subjected to different reporting requirements? Can they be subjected to different types of review?

Different types of taxpayers are subjected to different reporting requirements. The reporting obligations of corporate entities are different from those placed on individuals, as are the methods of review.

All tax obligations, whether on corporate bodies or on individuals, are imposed by federal legislation. The legislation for corporations and residents of the Federal Capital Territory and members of the armed forces is administered by the FIRS, while the legislation dealing with tax on individuals is administered by the Board of Internal Revenue of each individual state.

Corporations are required to ensure registration with the FIRS within six months of commencing business. Where a company declares a dividend, it must also ensure that a list of its shareholders, together with the full particulars of the dividend, is made available to the FIRS within 14 days of declaring the dividends. A company operating in the capital market must file a return of its transactions with the FIRS no later than seven days after the end of a month.

Companies engaged in the petroleum sector are obliged to file estimated tax returns no later than two months after the commencement of each accounting period and file the actual tax return within five months (that is 31 May of each year) after the accounting period.

A taxable person should file within 90 days from the commencement of every year, without notice or demand, a return of income in a prescribed form together with a true and correct statement containing the amount of income from every source in the preceding year of assessment, with the relevant tax authority in which the taxable person is deemed to be resident.

Requesting information

What types of information may the tax authority request from taxpayers? Can the tax authority interview the taxpayer or the taxpayer’s employees? If so, are there any restrictions?

The FIRS is at liberty to call for any form of information it deems necessary to perform its duties. The law empowers it to notify any company as often as it thinks necessary, requiring it, within reasonable time, to provide fuller or further returns.

For the purpose of obtaining full information in respect of the profits within the time specified by the notice to any person, the FIRS is required to give notice to the taxpayer, requiring the taxpayer to complete and deliver any return specified in such notice, or appear personally before an officer of the FIRS for examination with respect to any matter relating to such profit.

The FIRS may also serve notice on a bank to provide, within the time stipulated in the notice, information including the name and address of any person specified in the notice. It is also authorised to enter the premises, registered office or place of management or residence of the principal officer of the company to conduct a search; this authority is equivalent to a search warrant and authorises the seizure and removal of any records and documents found on such premises, whether or not they belong to the company.

Available agency action

What actions may the agencies take if the taxpayer does not provide the required information?

The FIRS may prosecute a person who does not provide the requested information and, upon conviction, the person will be liable to a fine of 10,000 naira or to imprisonment of not less than six months, or to both a fine and imprisonment.

Protecting commercial information

How may taxpayers protect commercial information, including business secrets or professional advice, from disclosure? Is the tax authority subject to any restrictions concerning what it can do with the information disclosed?

The tax authorities are obligated to regard and deal with all documents, information, returns, assessment lists and copies of such lists relating to the profits or items of profits of any company, as secret and confidential. By implication, this is to protect the commercial information and business secrets of the taxpayers.

Limitation period for reviews

What limitation period applies to the review of tax returns?

Where a company that has paid tax for any year of assessment alleges that any assessment made upon it for that year of assessment was excessive by reason of some error or mistake in the return, statement or account made by or on behalf of the company for the purpose of assessment, it may apply for a relief at any time not later than six years after the year of assessment within which the assessment was made.

Where the FIRS discovers, or is of the opinion, that any company liable to tax has not been assessed at all or assessed at a lesser amount than that which it ought to have been charged, the FIRS may within the year of assessment, or within six years after the expiry, assess such company at such amount or additional amount as ought to have been charged, provided that where any form of fraud, wilful default or neglect has been committed by or on behalf of any company in connection with any tax imposed, the FIRS may at any time and as often as may be necessary, assess such company at such amount or additional amount as may be necessary for the purpose of making good any loss of tax attributable to the fraud, wilful default or neglect.

Alternative dispute resolution

Describe any alternative dispute resolution (ADR) or settlement options available?

There is no provision in the statutes for any alternative dispute resolution or settlement option available to the taxpayer.

Collecting overdue payments

How may the tax authority collect overdue tax payments following a tax review?

Generally, any amount due by way of tax will constitute a debt due to the FIRS and may be recovered by a civil action brought by it.

The FIRS is also empowered (where a demand note has become final and conclusive) to distrain the taxpayer’s goods or other chattels, bonds, securities, any land, premises, or place in respect of which a taxpayer is the owner, and recover the amount of tax owed by sale of anything so distrained.


In what circumstances may the tax authority impose penalties?

The FIRS may impose penalties for late filing or failure to file returns.

How are penalties calculated?

The penalty for late filing of company returns is 25,000 naira in the first instance. Failure to file incurs a 5,000 naira fine for each subsequent month in which the failure continues.

What defences are available if penalties are imposed?

Relying on professional advice (be it an attorney or accountant) is not available as a defence if penalties are imposed.

Collecting interest

In what circumstances may the tax authority collect interest and how is it calculated?

If any tax is not paid within the prescribed period, a sum equal to 10 per cent of the amount of tax payable will be added thereto.

In the case of remittances paid in Nigerian naira, the tax due will carry interest at the prevailing minimum rediscount rate of the Central Bank of Nigeria, with its payment period to be determined by the minister from the date when the tax becomes payable until it is paid. The interest is recovered in the same way as the tax due.

In the case of remittances in foreign currency, the tax due will incur interest at the prevailing London Interbank Offered Rate or the prevailing minimum rediscount rate of the Central Bank of Nigeria, whichever is higher, with its payment period to be determined by the Minister of Finance from the date when the tax becomes payable until it is paid. The mode of tax recovery is applicable to interest recovery.

Criminal consequences

Are there criminal consequences that can arise as a result of a tax review? Are these different for different types of taxpayers?

Yes. Under various tax legislation, there are criminal consequences for filing false statements and returns, or aiding, abetting, counselling, inducing, assisting in preparing, delivering false accounts, or preventing an authorised officer from carrying out a lawful duty, or unlawfully, to refuse or neglect to pay tax.

In addition to the offences in the FIRS Act, there could also be criminal prosecution under any other enactment.

Enforcement record

What is the recent enforcement record of the authorities?

According to the FIRS’ official website, the target for assessment year 2015 was to recover 4.6 billion naira. The actual amount recovered was 3.8 billion naira. However, the 2012 assessment year remains the record, with 5 billion naira recovered from a 3.6 billion naira target.

Third parties and other authorities

Cooperation with other authorities

Can a tax authority involve or investigate third parties as part of the authority’s review of a taxpayer’s returns?

Yes, the FIRS can involve or investigate a third party in order to verify, monitor or review a taxpayer’s return or to call for fuller or further returns.

Upon demand, every bank should prepare quarterly returns specifying:

  • for individuals, all transactions involving the sum of 5 million naira and above; or
  • for body corporate, all transactions involving the sum of 10 million naira and above; the names and addresses of all customers of the bank connected with the transaction; and deliver the returns to the FIRS.

The FIRS may also, for the purpose of obtaining information for taxation, give notice to any person in Nigeria to provide information within the time stipulated in the notice, including the name and address of any person specified in the notice.

Without demand, every company operating in the Nigerian Stock Exchange is mandated to file with the FIRS’ board a return in a prescribed form of its transactions during the preceding calendar month, not later than seven days after the end of each month.

Furthermore, without demand, every person engaged in banking should prepare a return at the end of each month specifying the names and addresses of new customers of the bank and should, not later than the seventh day of the following month, deliver the return to a tax authority of the area where the bank operates, or where such customers are registered as a company with the FIRS.

Does the tax authority cooperate with other authorities within the country? Does the tax authority cooperate with the tax authorities in other countries?

Yes. The FIRS cooperates with state tax authorities and this cooperation is exemplified by the work of the JTB.

In accordance with double taxation bilateral treaties between Nigeria and 13 signatory countries (see question 1), the FIRS will cooperate with the tax authorities in those countries.

Furthermore, the federal government has signed up to the Multilateral Competent Authority Agreement (MCAA). The aim of this agreement is to provide a standardised and efficient mechanism to facilitate the automatic exchange of information in accordance with the Standard for Automatic Exchange of Financial Information in Tax Matters (the Standard). This agreement provides for the automatic exchange of information between parties to the agreement, where two parties subsequently agree to do so.

Special procedures

Voluntary disclosure and amnesties

Do any special procedures apply in cases of financial or other hardship, for example when a taxpayer is bankrupt?

No. There are no special procedures in cases of financial or other hardship. On the contrary, where a company is being wound up, the liquidator should not distribute any of the assets of the company to the shareholders unless he or she has made provisions for the full payment of any tax payable by the company, including tax deductions relating to the tax of any individual in any part of the country.

Are there any voluntary disclosure or amnesty programmes?

The authors are not aware of any voluntary disclosures or amnesty programmes in Nigeria.

Rights of taxpayers

Rules protecting taxpayers

What rules are in place to protect taxpayers?

The following are some of the rights afforded to taxpayers under the law:

  • Taxpayers have the right to be informed of any assessment and have the opportunity to respond.
  • Taxpayers have the right to contest or object to an assessment on any grounds cognisable under the law.
  • Where an objection is refused, a taxpayer has the right of appeal.
  • Whenever the FIRS is of the opinion that tax assessed on profits or income of a person has been fully paid, it should issue a tax clearance certificate to the person within two weeks of the demand for such certificate by that person or, if not, give reasons for the denial.

Requesting information

How can taxpayers obtain information from the tax authority? What information can taxpayers request?

While a taxpayer can approach the FIRS requesting information about their own tax records, it is unlikely that a taxpayer can obtain information about a third party. Although, under the Freedom of Information Act 2011, a person is entitled to obtain information from the government or any of its agencies, whether or not he or she has an interest in the matter and where the request for information is refused, the reason for the refusal must be given. However, the law recognises issues bordering on national security and privileged communication between a legal practitioner and client, health worker and client, and any other professional privileges conferred by the Act, as grounds for refusal.

Any person entitled to information under the Act will have the right to initiate court proceedings to compel a public authority to comply with the provisions of the Act.

Tax authority governance

Is the tax authority subject to non-judicial oversight?

The FIRS’ board has oversight functions over the FIRS’ activities. These functions include:

  • providing the general policy guidelines relating to the functions of the FIRS;
  • manage and superintend FIRS’ policies on matters relating to the administration of the revenue assessment, collection and accounting system under any law;
  • review and approve the strategic plans of the FIRS;
  • employ and determine the terms and conditions of service, including disciplinary measures, of the FIRS’ employees; and
  • do such other things deemed necessary to ensure the efficient performance of the FIRS.

Court actions (describe trial court actions in this section)

Competent courts

Which courts have jurisdiction to hear tax disputes?

The Constitution of the Federal Republic of Nigeria, 1999, vests the Federal High Court (FHC) with exclusive jurisdiction over matters concerning taxation or revenue in Nigeria over any other court.

However, certain statutes (the Companies Income Tax Act LFN 2004, the Petroleum Profits Tax Act LFN 2004, the Personal Income Tax Act LFN 2004, the Capital Gains Tax Act LFN 2004 and the Value Added Tax Act LFN 2004; see question 1) have also vested the Tax Appeal Tribunal (TAT) with jurisdiction to hear and determine tax disputes between the taxpayer and the FIRS. Curiously, the Act setting up the TAT confers on it the status of a court.

It is, however, worthy of note that the Court of Appeal in 2010 held that the proper venue for disputes over VAT is the FHC and not the TAT, although this case is now on appeal in the Supreme Court. Similarly, the FHC in 2013, following the earlier Court of Appeal case, held that the TAT lacked the jurisdiction to determine tax disputes and the appropriate forum for same is the FHC. This decision is also currently being challenged at the Court of Appeal.

Lodging a claim

How can tax disputes be brought before the courts?

In the FHC, a dispute is commenced by a writ of summons, followed by disputes of fact and by originating summons where the disputes are purely on questions of law or legislative interpretation.

If the dispute is referred to the TAT, it may be commenced by filing an appeal in no particular form.

There is no minimum threshold amount for claims, and claims can be sought for a declaration, orders for reversal of excessive liabilities or sums, or payments of outstanding sums or liabilities, together with interest upon the sum awarded.

Combination of claims

Can tax claims affecting multiple tax returns or taxpayers be brought together?

Tax claims affecting multiple returns by the same taxpayers can be brought together, but tax claims involving more than one taxpayer cannot be brought together.

Pre-claim payments

Must the taxpayer pay the amounts in dispute into court before bringing a claim?

No. Once an assessment is being challenged before the TAT or the FHC, the payment of the amount in dispute is put on hold until the judgment is given. Once the TAT or a court gives a judgment against a taxpayer, he or she will be required at that stage to pay the judgment sum, notwithstanding that the taxpayer intends to challenge the decision on appeal, except when a delay in carrying out the order is sought and obtained.

Cost recovery

To what extent can the costs of a dispute be recovered?

The cost of filing an action in court, together with attorneys’ fees, may be claimed in the same way as costs claimed through normal court actions, both by and from the taxpayer.

Third-party funding

Are there any restrictions on or rules relating to third-party funding or insurance for the costs of a tax dispute, including bringing a tax claim to court?

There is no restriction on third party funding but the use of such rules remains rare.

Court decision maker

Who is the decision maker in the court? Is a jury trial available to hear tax disputes?

There are no jury trials in Nigeria.

In the TAT, there are five commissioners, as appointed by the Minister of Finance, with a quorum of three commissioners.

In the FHC, matters are heard with one judge sitting as a court of first instance.

Appeals to the Court of Appeal are heard by three justices or a maximum of five justices.

In the Supreme Court, tax appeals are heard by five justices or a maximum of seven justices.

Time frames

What are the usual time frames for tax trials?

The act establishing the FHC provides that all revenue matters will, as far as practicable, be tried, determined or disposed of in priority to any other business of the court.

In practice, however, the court has the power to adjust the time frame depending on the case at hand, so it may take on average between six and 18 months.

Disclosure requirements

What are the requirements concerning disclosure or a duty to present information for trial?

Parties before the tax tribunal may present either oral or documentary information. The tribunal may also, when it deems necessary, call upon or permit any party to produce any additional document or call additional witnesses or file any affidavit to enable it to issue proper directions or orders. Also, as an exception to the general rule of confidentiality and disclosure, the tax authority or any of its employees can provide necessary information when called upon in order to prosecute, or in the course of a prosecution for any offence committed in relation to any tax in Nigeria.

Permitted evidence

What evidence is permitted in a tax trial?

In claims before the TAT and the FHC, oral and documentary evidence of the taxpayer and of other witnesses may be adduced, including, where relevant, evidence from experts. Where the witness does not testify in English, the testimony of the witness must be interpreted by an interpreter provided by the court or tribunal. Written material must be translated into English in order to be used by the court or tribunal, and such translation will be at the expense of the party seeking to rely upon such material.

Permitted representation

Who can represent taxpayers in a tax trial? Who represents the tax authority?

A taxpayer may appear in person or by a legal practitioner of choice.

The FIRS is normally represented by legal practitioners within the service, who are seconded from the Federal Ministry of Justice.

In criminal proceedings, prosecutions are made by the AGF, legal practitioners in his or her chambers, or a private practitioner by obtaining consent of the AGF to prosecute.

Publicity of proceedings

Are tax trial proceedings public?

Yes. Tax proceedings in the TAT and the various levels of courts are held in public.

Burden of proof

Who has the burden of proof in a tax trial?

The person who asserts bears the burden of proof. Thus, the party that institutes the claim must prove the same on a balance of probability.

In criminal proceedings, the prosecutor must establish the commission of the crime beyond a reasonable doubt.

Case management process

Describe the case management process for a tax trial.

The rules of the TAT are silent on the case-management process for trial. However, when there in is no provision or adequate provision in its rules of practice and procedure, it follows the rules applicable in the FHC. In the FHC, the process is as follows:

  • Upon being served with the claim, the defendant should deliver a defence within 30 days of service.
  • If the plaintiff wants to file a reply to the defence, he or she should file it within 14 days from the service of the defence.
  • In the absence of any matter to be disposed of during interlocutory proceedings, the matter proceeds to trial.
  • After the conclusion of evidence, the court adjourns to such time as it deems fit for final addresses.
  • After the conclusion of the trial, the judgment will be delivered within 90 days from the conclusion of evidence and final addresses.

However, where a party defaults in complying with the time frames stipulated above, the party can apply to the court for the time to be extended and the court has the discretion to extend the time upon payment of a default fee of approximately 1,000 naira for each day of the default.


Can a court decision be appealed? If so, on what basis?

All decisions of the TAT and other courts except the Supreme Court are open to appeal, either as of right or with leave of the court. The time frames for these are:

  • appeals from the TAT to be laid to the FHC within 30 days of the decision;
  • appeals from the FHC laid to the Court of Appeal within 14 days in respect of an interlocutory appeal and 90 days in the case of a final appeal; and
  • appeals from the Court of Appeal laid to the Supreme Court within 14 days if the appeal is interlocutory and 90 days where it is in a final decision.