Presented by the Executive Chairman of FIRS at the Tax-ADR Workshop held on 19th May 2022.


The goal of this presentation is to provide practical guidance and improve the understanding of certain aspects of the domestic dispute resolution mechanisms as it relates to tax with reference to FIRS experience. These include both mechanisms that are created within, and thus as part of, the tax administration, as well as mechanisms that operate independently of the tax administration. Practice has shown that countries around the world have often chosen to adopt several different dispute resolution mechanisms instead of just relying on one. The case of Nigeria is no different, litigants are therefore to determine which of the mechanisms described best suit their circumstances, the nature of the tax disputes that typically arise for their tax administration and the legal framework.

The Concept of Tax Regulation in Nigeria

  • Tax regulation or laws are the rules and regulations that stipulate how, when and how much must be paid in taxes to the local, state and federal authorities. Tax laws have also been described as the rules, policies and laws that oversee the tax process, which involves charges on estates, transactions, property, income, licenses and more by the government.
  • Tax laws are created, tailored, modified and amended by the legislature of the country. In Nigeria, this happens to be the National Assembly of the federation in current times. Some of the relevant tax regulations in Nigeria are derived from 1999 Constitution of the Federal Republic of Nigeria. These regulations are as follows;

Tax Regulations in Nigeria

  • CAPITAL GAIN TAX ACT is the Act which regulates Capital Gain Tax – Capital Gains tax is imposed at a flat rate of 10% of chargeable gains, it imposes tax on capital gains derived from sale or disposal of chargeable asset.
  • VALUE ADDED TAX (VAT) Act is the Act which regulates VAT – Value Added Tax Act impose tax on the net sale value of non-exempt, qualifying goods and services in Nigeria. The vat rate is 7.5% of the value of the supply or sale.
  • PETROLEUM PROFIT TAX Act – Imposes tax on the profit of corporate entities engaged in petroleum operations in Nigeria.
  • STAMP DUTIES Act – Imposes duties on instrument executed in Nigeria or brought into Nigeria
  • PERSONAL INCOME TAX Act- Personal Income Tax Act impose tax on income of individuals including partnerships and enterprises
  • COMPANY INCOME TAX – Impose tax at the rate of 30 % on the profit of corporate entities who are registered in Nigeria or derive income from Nigeria

What is Dispute Resolution

  • Tax administrations around the world have the power to verify that their taxpayers have complied with the letter and spirit of the tax law. A tax administration’s review of the accuracy of the tax paid and/or the return that is filed may conclude with a determination of an underpayment of tax, followed by the assessment and collection of the determined tax deficiency.
  • The tax administration may also conclude that a taxpayer is not paying the taxes owed in a timely manner and may assess interest and/or penalties and enforce collection actions. Given this relationship, it is inevitable that disagreements between the tax administration and taxpayers will arise.
  • It is of critical importance to the best interests of both the tax administration and taxpayers that disputes, when they arise, are addressed and resolved as quickly and efficiently as possible.
  • Dispute resolution is the processes adopted for the purposes of resolving these disagreements.

Why Dispute Resolution?

Effective resolution of disputes contributes to and enhances public confidence and the

integrity of the tax administration in its role in collecting tax revenues for the


▪ In this regard, it is important that tax administrations also provide avenues to air

disputes with taxpayers regarding certain matters of a general nature, such as concerns

by taxpayers over the adoption of new audit or collection policies or the issuance of

new tax forms, tax rulings, etc as doing so will contribute to the public confidence of

the tax administration.

▪ From the point of view of the taxpayer, access to mechanism resolving disputes should

be available to ensure the action giving rise to the dispute, such as an assessment of

additional taxes owed, was accurately determined and does not result in an over

calculation of the tax liability owed.

▪ It is beneficial to both the tax administration and taxpayers to be able to resolve

disputes as early, quickly and efficiently as possible hence otherwise may amount to

significant legal expenses, delayed revenue for government and other legal risks.

Major Triggers of Tax Dispute

Disputes may arise where, after an audit or examination, the tax administration concludes that additional taxes should be payable and issues an assessment or reassessment or demand of payment of tax. Some examples of findings from an audit or examination that lead to disputes regarding the amount of tax liability include:

  • Interpretation of Tax Laws 
  • Inconsistency in the provisions of the law
  • Inability of Taxpayers to keep records.
  • Audits/Tax Investigations
  • Procedure for Exercise of Statutory Powers


  • FIRS Administrative Options
  • Internal ADR
  • Tax Appeal Tribunals
  • Traditional Courts
  • Decision Review Panel
  • Mutual Agreement Procedure

Dispute Resolution Channels –the Legal Framework

Administrative options:

  1. Section 69 of the Companies Income Tax Act (CITA) empowers the taxpayer to explore an administrative option in resolving a potential conflict where he disputes an assessment raised on it through an objection raised against such an assessment.
  2. Similarly, section 58 of the Personal Income Ta x Act (PITA) empowers an individual to seek for an administrative review of its assessment through the objection mechanism.
  3. On the side of the Service, potential area of conflicts may be cleared by using it powers to call for further returns, documents or information under sections 26 of FIRSEA, 58 of CITA and 60 of CITA.
  • Tax Appeal Tribunal (TAT): Section 59 of the FIRSEA established the TAT to settle disputes arising from the operation of all the tax laws.
  • Federal High Courts: Section 251 of the 1999 Constitution as amended confers exclusive jurisdiction on tax matters on the Federal High Court.
  • Mutual Administrative Assistance: Article 26 of the Nigeria Tax Treaty Models, the equivalence of Article 24 of both the OECD and UN models provides

“Where a person considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with the provisions of this Agreement, he may, irrespective of the remedies provided by the domestic law of those States, present a case to the competent authority of either Contracting State”

Arbitration: Nigeria does not subject tax disputes to Arbitration – Esso Petroleum and Production Nigeria Limited & SNEPCO vs NNPC.

FIRS Administrative Options – Objection Processes

  • The taxpayer is entitled to an objection where it disputes an assessment made by the Service on it.
  • The object of the objection is to review or revise the assessment
  • The objections must be in writing
  • It must be brought within 30 days, though time may be extended where the Service is satisfied that failure to file within time is as result of
  • The ground of objection must include:

• Assessable and total profit of the company for the relevant year

• The amount of tax payable as claimed by the company

  • On receipt of the Assessment, the Service may ask for necessary particulars and if convinced that the objection is valid, it may issue a revised assessment.
  • Where the assessment is revised, notice is given to the taxpayer for that effect.
  • Where the Service is not convinced by the objection, it is to issue Notice of Refusal to Amend (NORA) to the taxpayer.

FIRS Administrative Options – Tax Ruling

  • Section 60 of FIRSEA empowers the Service to make rules and regulations as in its opinion necessary to give full effect to the provisions of the Act and for the due administration of its provisions.
  • Based on the above and other provisions enabling it, the Service is empowered to from time to time deliver its opinion on a given provision of the law through public or private rulings.
  • The public rulings come by way of public circulars or public notices while the
  • private ruling a confidentially delivered to taxpayers who requested for same.
  • Rulings could be deployed to avoid potential conflicts or disputes.
  • Private ruling may be obtained by writing the Executive Chairman-FIRS and ‘attentioning’ the Director, Tax Policy and Advisory Department.

Tax Appeal Tribunal

  • Tax Appeal Tribunals are located across about 8 regions of the country
  • It is empowered to determine disputes arising from the administration of all the tax laws
  • It consists of a panel of 5 members drawn from tax-relevant professional which must be headed by a lawyer
  • A taxpayer aggrieved by an assessment or demand notice from the Service may appeal same to the TAT within 30 days of the receipt of such an assessment or demand notice.
  • The Service may also utilize the TAT where aggrieved by non-compliance by a taxpayer
  • Proceedings are commenced in the Tribunal by filing the relevant processes with the secretary to the Tribunal.
  • Documentary and oral evidence may be adduced before the Tribunal.
  • Where a different amount is determined by the Tribunal as payable, the Service is to serve the taxpayer with a fresh assessment bearing the amount.
  • Taxpayer is to pay the amount within one month of service or appeal to the FHC on points of law.

Traditional Courts

  • Taxpayers or the Service have the option to take their cases to the Federal High Court or to explore the TAT first before doing so.
  • Unlike TAT, clients could only be represented before the court by lawyers
  • Actions are commenced before the court by filing relevant processes at the court registry.
  • Litigants are to file their cases in the division of the court in charge of the geographical location from where the dispute arose.
  • Oral or documentary evidence may be adduced to support one’s view or counter opponents’ deposition.
  • Decision of the court can be appealed to the Court of Appeal and then to the supreme court.
  • The decisions where not stayed can be enforced using the mechanisms provided by the law.

Mutual Agreement Procedure (MAP)

  • Where a taxpayer from a country with which Nigeria has treaty or a Nigerian doing business with such countries considers that the actions of one or both of Nigeria or that country result or will result for him in taxation not in accordance with the provisions of the tax treaty, he may, irrespective of the remedies provided by the domestic law of Nigeria, present a case to the competent authority of either Nigeria or that country.
  • The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of the tax treaty.
  • The competent authority of Nigeria shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other treaty partner.
  • The competent authorities of the Contracting States may communicate with each other directly, including through a joint commission consisting of themselves or their representatives, for the purpose of reaching an agreement in the sense of the preceding paragraphs.
  • Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States.

Decision Review Panel (DRP)

  • Regulation 21 of the Income Ta x (Transfer Pricing) Regulations of 2018 created the DRP.
  • The panel comprises of the head of TP function of the Service, the representative of the Legal Department not below the rank of a Deputy Director, 3 other employees of the Service not below the rank of a DD.
  • The panel is to settle or resolve any issue arising from the application of the Regulations.
  • A taxable person who objects to a TP assessment may within 30 days of the receipt of such assessment lodge such an objection with the DRP through the Head of TP Function.
  • The panel is to sit over the objection and make determination.
  • The panel in rendering decision must consider the:
  • adjustment or assessment issued,
  • the basis of issuing such adjustment or assessment,
  • the objection raised, and
  • the evidence presented to back up the objection.
  • The decision of the panel constitutes the final position of the Service and the taxpayer if still unsatisfied may explore other independent dispute resolution options.


Negotiated Tax Settlements

  • Ta x settlements are widely used by tax administrations around the world to solve tax disputes at the administrative or judicial level.
  • The opportunity to resolve dispute by way of settlement is part and parcel of tax administration
  • This opportunity during the audit processes appears by way of call for additional information, Letter of intent, conference with taxpayers or their representatives, reconciliation, etc.
  • In the judicial process, it manifests as out-of-court settlement, consent judgements, etc
  • Order 18, Rule 1 of the Federal High Court (Civil Procedure) Rules empowers the Federal High Court Judges to encourage out of court settlement in appropriate cases.
  • The terms of agreement upon which a consent judgement is based must not be against public policy or public interest.
  • “The hazards of litigation,” i.e., the costs in time and resources and likelihood of success should the case be decided by a judge is a key consideration from both side in opting for a negotiated settlement.
  • Negotiated tax settlement does not equate to giving away or compromising taxes that are due to government.

Time Limits

  • Nigeria tax laws provide for time limitations for the Service or taxpayers to take certain actions.
  • A taxpayer is given 30 days, from the date of receipt of assessment to object to or appeal the assessment (section 69 of CITA). Appeal not lodged within the time limit may become invalid leading to the assessment becoming final and conclusive under section 76 of CITA.
  • Similarly, once a tax return has been correctly submitted, the Service is only allowed 6 years from the expiration of the relevant accounting year, to review and assess additional tax regarding the taxable period corresponding to the return –See section 66 of CITA.
  • Time limits such as these can create issues when implementing a dispute resolution mechanism.
  • It is important to note that the time limitation in section 66 of CITA does not apply in cases of fraud, wilful default or neglect.
  • Similarly, the taxpayer has up 3 years under the MAP to initiate an MAP procedure

Jurisdictional issues

  • Tax fraud and crimes cannot be handled administratively
  • TAT is compelled, under the law, to refer such matters to the relevant authorities for prosecution.
  • Appeal of TAT rulings, according to TAT rules, could lie to the Federal High Court only on matters of the law but questions are raised as to whether this is not an undue limitation of the constitutionally bestowed powers on Federal High Court as courts of first instance.
  • Taxpayers’ choice as to whether to use TAT before FHC or to jump straight to the Federal High court remains and unsettled issue.
  • Arbitral tribunals have no jurisdiction on tax matters in Nigeria
  • Under MAP, a taxpayer can lodge his case with either competent authorities of any of the contracting states, trips by either of the Competent Authority or their representatives can pose a significant cost.

Sundry issues

Incessant adjournment of cases by the court

▪ Lack of evidence

▪ Lack of commitment to the process by parties

▪ Delay tactics by litigants

▪ Cost of litigation

▪ Delayed payment of government revenue

▪ Prejudicial disposition of parties

▪ Lack of dispute resolution skills

▪ Undue interference with dispute resolution processes.


1. Audit & Investigation Objection Review Committee: This is a committee set up to review arguments and counter-arguments as a result of an assessment arising from Audit or Investigation but before the institution of the TAT process.

2. Voluntary Asset & Income Declaration Scheme (VAIDS): is an initiative designed to encourage voluntary disclosure of previously undisclosed assets and income for the purpose of payment of all outstanding tax liabilities.

3. Voluntary Offshore Asset Regularisation Scheme (VOARS): is an opportunity for Nigerian relevant persons and their intermediaries to voluntarily and conveniently regularize their offshore assets held anywhere in the world by paying a one-time levy as fine for the years of irregularity.

4. Out-of-Tribunal Settlement: When a case is either in TAT or The Courts, on the pronouncement of either the court of the parties, any dispute could still be settled out of the tribunal. A total amount of N4 billion has been realised since the committee was formally inaugurated in February 2020.

Objectives of ADR – FIRS Experience

  1. Identify the core issues in the disputed tax liability under consideration.
  2. Ensure taxpayers pay undisputed tax liabilities immediately.
  3. Make recommendations to management on identified lapses and amicable resolution of the disputes therefrom.
  4. Assist the Service in its drive to meet the revenue target.
  5. Be well guided, transparent and fair to all parties and engender taxpayer confidence in an equitable manner.
  6. Where the assessment has become final and conclusive, the committee may recommend a waiver of interest & penalties to management.
  7. The committee may recommend a waiver of tax liability.
  8. Option for instalment payment of outstanding tax liabilities subject to approval by management over a period of six (6) months.


There is the need for taxpayers to take advantage of Out of Court settlement to resolve tax disputes that are capable of being resolved without prolonging the issues and in effect delaying the needed funds that will aid government fiscal policies.

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