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PwC speaks on TAT, says 50% deposit rule will hinder justice in tax administration

“First is the trust issue, because when I pay my taxes, I must have confidence that government will use it judiciously in the provision of services for citizens.”




PricewaterhouseCoopers (PwC) has said the 50 per cent deposit provision in the new Tax Appeal Tribunal (TAT) in the country could hinder affected companies from getting justice.

Mr Kenneth Erikume, Partner/Director, Tax Reporting and Strategy at PwC, made this known while speaking on Arise Television.

Erikume also called for a review of the new procedure, advising that on the alternative, it could be challenged by those impacted by the rule.

Recall, Zainab Ahmed, Minister of Finance, Budget and National Planning, had approved the TAT procedure, which replaced the 2010 TAT rules, which she said had some shortcomings and had become obsolete.

It was learnt that the new rules recognised service of documents by email or such other electronic means as the tribunal may permit and also allow for virtual or remote hearing of applications and delivery of rulings by the tribunal.

It also introduced a six-month timeframe from the date of commencement of trial for the tribunal to conclude and provide a decision on an appeal.

Meanwhile, order 3 rule 6 of the the procedure indicated that: “For an appeal against the tax authority, the aggrieved person will pay 50 per cent of the disputed amount into designated account by the tribunal before hearing as security for prosecuting the appeal”.

The PwC argued that that the portion of the law is inconsistent with similar provisions in the Federal Inland Revenue Service (Establishment) Act 2007 which gives the TAT discretion to order payment as security where a taxpayer failed to file returns, stressing it could constitute a cog in the wheel of justice.

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The consultancy firm noted that Nigerians already have trust issues with the tax system in the country, stressing that the new rule will further make matters worse.

According to him, “First is the trust issue, because when I pay my taxes, I must have confidence that government will use it judiciously in the provision of services for citizens.

“There’s a second one, which is in the heart of the new TAT rules, which is the confidence within the tax administration system itself. That is when the tax payer is confident that when they pay taxes, and comply, they won’t be harassed.”


Erikume maintained that while the objective of the TAT may be commendable, the big problem with the new procedure is that it instituted a requirement that companies have to pay a 50 per cent deposit of the disputed tax before the tribunal hears any matter.

PwC said: “Obviously, that is creating a bar against fair hearing or the right of taxpayers to be able to be able to present their case for proper assessment by the tribunal.”

He mentioned the case of Acadia mining against the Tanzania tax authorities in a whopping $190 billion dispute, stressing that if it was under the current TAT rules in Nigeria, the company would need to deposit over $95 billion for its case to be heard.

Erikume added that that would compare to about five Dangote refineries, which would create an impossible scenario for people and companies to get justice.

According to him, “If these rules are applied as they currently are, it means that there will be a lot of companies that will be disadvantaged because they cannot take their issues to the tribunal.

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“It means that the tax authorities will be in a stronger negotiation position and may even abuse that opportunity because they can issue an assessment of any amount knowing that before you get the matter to the tribunal, you have to cough out that amount.”

He argued that the new procedure ignores some principles of fairness and equity and clearly contradicts the substantive Financial Reporting Council of Nigeria Act.

According to the PwC, the tax system in Nigeria focuses a lot on a few companies and try to milk them, stressing that there are complications in the country’s fiscal structure, making it difficult to collect taxes.

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