Tax disputes can be commenced either by the taxpayer or by the relevant tax authority (RTA).
A taxpayer who objects to a tax assessment may within 30 days of receiving notice of the assessment apply by notice of objection to the Federal or State Inland Revenue Service (depending on whether it is a federal or state tax) urging the RTA to review the tax assessment along the lines of the objection raised. Where the RTA agrees with the objection, the assessment will be amended accordingly. However, where the RTA disagrees with the objection, it shall issue a NORA.4 Upon a NORA being issued against a taxpayer's objection, the aggrieved taxpayer shall within 30 days of receipt of the NORA file an appeal at the TAT or file an action at the relevant federal or state High Court.
Generally, an action may be commenced at the High Court either by a writ of summons, originating summons or an originating motion or petition. A writ is used where the facts are in dispute and the case is likely to be contentious. The writ is filed along with a statement of claim setting out the plaintiff's claims and reliefs sought. Where the facts are not in contention or where a party seeks interpretation of a statute, agreement or document, an originating summons is advisable for commencing the action. An action may also be commenced by originating motion or petition where expressly provided by statute.5
To commence proceedings before the TAT, the appellant shall file a notice of appeal in Form TAT 1 in the zone of the TAT where the facts of the case arose. The notice of appeal must contain the grounds of appeal; whether the whole or part only of a decision is contested; the exact nature of the relief sought; the names and addresses of all parties directly affected by the appeal; and the address for service on the appellant and respondent. The notice of appeal must be filed concurrently with the list of witnesses, witnesses' written statements on oath and copies of every document to be relied on at the trial.
All processes filed are to be served personally on the respondent, unless an order for substituted service is granted by the Tribunal. Upon receipt of the filed documents, the respondent has 30 days within which to file its opposition in Form TAT 3. Proceedings at the TAT are to be held in public, and the onus of proving its case rests on the appellant.6
The Tribunal may, after hearing both parties, confirm, reduce, increase or annul the assessment or make any such order as it deems fit.7
Either party aggrieved by the final decision of the TAT may appeal to the FHC by giving notice in writing to the secretary to the TAT within 30 days of the service of the TAT's final decision on the party. Failure to appeal within this set time will mean the assessment and demand notices become final and conclusive, or in the case of an action against a decision of the RTA, it means the decision of the TAT is final and conclusive.
Statutes of limitation do not apply to appeals brought before the TAT,8 save the provisions relating to time within which to appeal after a NORA and to appeal from a decision of the TAT. Also, statutes of limitation do not apply to actions filed by the RTA for recovery of any tax.
Other than tax returns, there are no other procedures for claiming tax reliefs or exemptions as reliefs or exemptions can only be claimed if they apply at the time of filing the returns.
Possible triggers of tax disputes include:
- information garnered by the RTA during periodic audits;
- information delivered by bankers to the Federal Inland Revenue Service (FIRS) as provided by law: the law requires bankers to make quarterly returns to the FIRS specifying details of transactions of 5 million naira and above for individuals and 10 million naira and above for corporate bodies;
- periodic returns filed by a taxpayer; and
- assessment or additional assessment by RTA.
Certain differences exist for commencement of disputes over different types of taxes. They include:
- personal income tax: disputes relating to personal income tax may be commenced before the Revenue Courts, Customary Courts, Magistrates' Courts, State High Courts, the TAT or the FHC, depending on the jurisdiction of the court, the amount of tax involved and whether the action is against the federal or state tax authority;
- corporation tax: companies income tax (CIT) is a federal tax and all disputes relating to its payment are commenced before the TAT or FHC;
- wealth taxes: individuals are not taxed on their net wealth as a separate tax in Nigeria. Property taxes, withholding tax on dividends and capital gains taxes are charged on companies or individuals. Commencement of tax disputes would depend on the taxpayer and the tax base;
- partnerships: partnerships are treated as transparent or flow-through entities for tax purposes in Nigeria and only the individual partners are taxed on their respective shares of the partnership profit. Disputes arising out of taxes on the individual partners may be commenced before customary courts, magistrates' courts, state High Courts, the TAT or the FHC, depending on the jurisdiction of the court, the tax payer, the amount of tax involved and whether the action is against the federal or state tax authority;
- indirect taxes: indirect taxes in Nigeria include value added tax (VAT) and customs and excise duties. As with federal taxes, disputes are commenced at the TAT and FHC. However, where it involves individuals, the commencement procedure for individuals and partnerships as listed above apply; and
- stamp duty: disputes over stamp duties may be commenced before the State High Courts, the TAT or the FHC depending on whether the duties accrue to the federal or state government and whether they involve individuals, partnerships or corporations.