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On 20 August 2019, the Tax Appeal Tribunal (TAT or
Tribunal) sitting at Enugu, held that a taxpayer may not be liable
to taxes (including interest and penalties) based on assessments
arising after the expiration of the six years statutory period for
tax audits. In addition, the Tribunal held that the Abia State Board of
Internal Revenue cannot collect taxes/levies simply because
they are listed under the Taxes and Levies (Approved List for
Collection) Act (Taxes and Levies Act) if there are no primary
legislation providing for the imposition and assessment of the tax
or levy. This decision was reached by the TAT in the case between
Polaris Bank PLC (Bank) v Abia State Board of Internal
Revenue (ASBIR).
Details
In 2017, ASBIR conducted a tax audit on Polaris
Bank. Subsequently, the Board issued the Bank with a demand
notice accompanied by a tax assessment for payment of outstanding
taxes and levies comprising of Withholding Tax (WHT), Pay as You
Earn (PAYE), Development Levy, Business Premises Levy as well as
interest and penalties for under remittance of its tax liabilities
for 2006 – 2011 tax years. The Bank objected to the
assessment and subsequently appealed to the TAT.
One of the major issues for determination at the TAT was whether
ASBIR was entitled to collect penalty and interest based on the
demand notices served on the Bank. The Tribunal held that Polaris
Bank was not liable to taxes (including interest and penalties) on
the assessment because the period assessed (2006 – 2010)
exceeded the six years audit period allowed for tax authorities to
make additional tax assessments pursuant to Section 55 of PITA.
On whether the assessments were final and conclusive, the TAT
held that the tax assessments by ASBIR were not final and
conclusive because the Bank made a valid objection to the
assessment within 30 days from the date the assessment was made as
required under Section 68 of PITA.
With respect to the Development Levy and Business Premises Levy,
the TAT held that the ASBIR could not collect the levies because
there was no primary tax legislation which provided for the
imposition of the levies by the ASBIR. The Tribunal noted that the
Taxes and Levies Act is not a primary tax legislation and also
emphasized that the fact that Polaris Bank had paid the levies in
the past would not make them liable for the levies.
Implications
This decision reinforces the fundamental requirement for
additional tax assessments to be made within the statutory six
years' limitation period as non-compliance with this time limit
could render the assessment and any accompanying interest and
penalty, unenforceable against the taxpayer.
The decision also implies that even when the Taxes and Levies
Act has mentioned a type of tax to be collected by the tax
authorities, it will not be enforceable except such tax has been
specifically imposed by an enabling law. This aligns with the
fundamental principle of Nigerian tax laws.
In the light of the TAT decision, it is pertinent for taxpayers
to be mindful of their rights and continue to engage relevant
professionals for guidance before paying for a tax assessment.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The Finance Bill, 2019 (the Bill) was presented together with the 2020 Appropriation Bill to the National Assembly by President Muhammadu Buhari and is being considered for passage into law.
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