Facts of the Case

In Theodak Nigeria Limited v FIRS, FIRS assessed the company, engaged in the letting of office premises, to tax based on a percentage of the value of its property relying on section 30(1)(a) of CITA. The company challenged the assessment and asked the Federal High Court (FHC) to declare the assessment invalid and also restrain FIRS and/or its agents from taking steps to enforce the assessment.

Our viewpoint

In our opinion, CITA does not grant the FIRS powers to deem a company's turnover under any circumstance. Section 30 only grants the FIRS powers to deem the assessable profits of a company based on the turnover as contained in the company's returns. Where a company fails to file returns, the relevant section is s65(3) of CITA which empowers the FIRS to deem a company's total (taxable) profit using Best of Judgement. Again this section does not empower FIRS to deem a company's turnover.

With respect to objection under section 69, even though the FHC held that it is not mandatory for a taxpayer to object to an assessment, our view is that a taxpayer who decides not to object to FIRS must appeal to the Tribunal/Court within 30 days of receipt. The word 'may' should be read to give the taxpayer the option of either objecting or appealing within 30 days. This is consistent with Paragraph 13 of the 5th Schedule to the FIRS (Establishment) Act (which overrides CITA). Failure to object or appeal within 30 days would make the assessment final and conclusive.

Read our alert for further analysis and download a copy of the judgement for your reference.

Download PwC Tax Alert_FHC Decision on Turnover Assessment_Jan2019

Download CTC OF JUGDMENT_Deemed turnover assessment_29Nov2018

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