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Published online by Cambridge University Press: 13 February 2012
The recent law revision exercise and tax reform in Nigeria have unwittingly introduced a measure of confusion into determining the applicable tax statute(s). The problem is so bad that, if the opinion of three different experts were sought on the same issue, it is possible that they would purport to be referring to the same law yet cite different sections of different laws. The thrust of this article is to disentangle the associated issues for the proper guidance of taxpayers and the Federal Inland Revenue Service (FIRS). The article posits that the continued use of the Laws of Federation of Nigeria 1990 by FIRS is most inappropriate and illegal, and may open any assessment performed under them to legal challenge. The article advocates for a re-enactment of the Companies Income Tax Act.
1 Two principal tax statutes were recently amended: the Companies Income Tax (Amendment) Act No 11 of 2007; and the Value Added Tax (Amendment) Act No 12 of 2007. Another independent statute, the Federal Inland Revenue Service (Establishment) Act No 13 was enacted to re-establish FIRS.
2 Schedule 1 to the FIRS (Establishment) Act No 13 of 2007 expressly refers to the LFN 1990 version as the applicable law. Also, in a letter dated 19 March 2009 ref 10403535/OS/2009/2 to the liquidators of Alan Dick and Company West Africa Ltd, the Large Taxpayers' Office (Non-Oil) of FIRS cited sec 40 of the Companies Income Tax Act cap 60 of LFN 1990, whereas the provision in question is in sec 51 of the Companies Income Tax Act cap C21 of LFN 2004.
3 The five leading tax firms in Nigeria (PricewaterhouseCoopers, AkintolaWilliamsDelloite, Ernst & Young, KPMG Consulting Services and Saffron Professional Services) use LFN 2004.
4 There must be an express statutory authority before tax can be imposed. As a rule, the court will not extend the language of a taxing statute to subject a person to tax where the language is ambiguous. See Cape Brandy Syndicate v IRC (1921) KB 64, Crawford v Spooner (1846) 6 Moore PC 189, Mapp v Oram (1968) 3 All ER 1 at 5, Coltness Iron Company v Black (1881) App Ca, 315 at 330, SA v Regional Tax Board (1970) 1 ALR comm 68, Aderawos Timbers Trading Company Ltd v FBIR (1969) 1 All NLR 247.
5 A consultant who was a resource person at an in-house tax training programme organized for the staff of Banwo and Ighodado in Lagos, Nigeria by Tax Planning Support Services shared his experience as a prelude to the presentation of his paper on “Recent developments in corporate income taxation in Nigeria”. According to him, the client decided to seek an independent third opinion from the consultant to clarify the basis of references to three sets of laws (LFN 1990, LFN 2004 and the tax statutes enacted in 2007) received in the two earlier opinions without adequate explanation.
6 See note 1 above.
7 The 19 member study group headed by Professor Dotun Phillips submitted its report in July 2003: “Main report of the study group on the Nigerian tax system”.
8 The 12 member working group headed by Seyi Bickersteth submitted its report in March 2004: “Nigerian tax reform in 2003 and beyond”.
9 It was his desire when he inaugurated the committee that it should work “flat out” to complete the task in three months. See the preface by Hon Justice EO Ayoola to LFN 2004, vol 1 at xviii.
10 Revised laws were published in 1948 and 1958 under the colonial administration. The law revision exercise brought into being LFN 1990, which was published in 1990 after a long gap of 32 years. It was resolved in 1990 that the Laws of Federation should be revised every ten years.
11 Chief Bola Ige was brutally murdered in December 2001 and succeeded by Chief Kanu Agabi (SAN). Before the committee could deliver the final draft, Chief Agabi ceased office as attorney general and minister of justice. The final draft was finally submitted to his successor, Chief Akin Olujimi (SAN). See preface to LFN 2004, above at note 9 at xvii.
12 See Revised Edition Act, sec 1.
13 See preface to LFN 2004, above at note 9 at xv.
14 Id at xvi.
15 Id at xiv.
16 Finance (Miscellaneous Taxation Provisions) Decree No 21 of 1991, Finance (Miscellaneous Taxation Provisions) Decree No 63 of 1991, Finance (Miscellaneous Taxation Provisions) Decree No 31 of 1993, Finance (Miscellaneous Taxation Provisions) Decree No 30 of 1996, Finance (Miscellaneous Taxation Provisions) Decree No 31 of 1996, Finance (Miscellaneous Taxation Provisions) Decree No 32 of 1996, Finance (Miscellaneous Taxation Provisions) Decree No 18 of 1998, Finance (Miscellaneous Taxation Provisions) Decree No 19 of 1998, Finance (Miscellaneous Taxation Provisions) Decree No 21 of 1998, Finance (Miscellaneous Taxation Provisions) Decree No 40 of 1998 and Finance (Miscellaneous Taxation Provisions) Decree No 30 of 1999.
17 85 plus 21 amending provisions total 106. Sec 1A on the establishment of a technical committee is now section 1(2) of CITA 2004, not a substantive section; this accounts for why the total number of sections in CITA 2004 is 106, not 107.
18 Chief Akin Olujimi (SAN), the former attorney general of the federation and minister of justice, began his foreword to the LFN 2004: “[t]he successful publication of this Edition of the Laws of the Federation of Nigeria must undoubtedly evoke feelings of accomplishment in all stakeholders in the administration of justice in Nigeria. …. This edition being the first since Nigeria returned to constitutional democracy on May 29, 1999.” See foreword by Chief Akin Olujimi to LFN 2004, vol 1 at ix.
19 Phillips “Main report of the study group”, above at note 7.
20 Bickersteth “Nigerian tax reform in 2003 and beyond”, above at note 8.
21 The Tax Study Group recommended, among other things: (i) various amendments to major tax statutes; (ii) the compilation of registers of individual and corporate taxpayers; (iii) the issue of smart taxpayer national identification numbers; (iv) the adoption of a national tax policy; (v) streamlining of tax incentives; (vi) the establishment of autonomous tax authorities; (vii) and the replacement of all existing taxes with only two taxes (income tax and expenditure tax). See generally Bickersteth, id.
22 The Education Tax (Amendment) Bill was later withdrawn. See Fasoto, FNigerian Tax Companion (2nd ed, 2007, Hortosaf Associates Ltd) at vGoogle Scholar. The withdrawal was as a result of the change of the initial government policy to abolish the education tax fund which had been established under the Education Tax Act to administer the proceeds of the tax.
23 At this stage some courts had questioned the legality of citing the revised law in the court in the absence of an enabling law. This was however not reported in any decided case.
24 FIRS was driving the passage of the bills and liaising with the National Assembly.
25 It suffices to say that much valuable time was indeed lost as a result of this policy reversal. A special retreat was organized in Kaduna in 2005 for the members of the House of Representatives, with the objective of concluding all technical aspects of the bills. Considering the usual tight schedule of the members of the National Assembly it was not easy to reconvene and reconsider the bill until sometime in late 2006.
26 The term of the National Assembly expired on 28 August 2007.
27 The National Sugar Development Council (Amendment) Act is not strictly a taxing statute, since the principal statute was enacted to establish the National Sugar Development Council which was to provide guidance on the development of sugar estates and the organisation of the sugar cane growers scheme to enhance the local production of sugar. Section 2(a) of the act provided a surcharge of 10% on all sugar imports as part of the revenue for financing the council. The National Sugar Development Council (Amendment) Act was enacted to abolish the surcharge.
28 Sec 27 contains a list of deductions disallowed for tax purposes.
29 See the preface to Nigeria: A Guide to the Federal Statutes (2000, Centre for Law and Development Studies)Google Scholar.
30 See preface to LFN 2004, above at note 9 at xiv.
31  4 NWLR (pt 498) 124.
32 Id at 149–50, paras G–A.
33 See above at note 2.
34 See UAC v Mac Foy  WLR 3.
35 See Alhaji Madi Mohammed Abubakir v Bebeji Oil and Allied Products Ltd and Two Others  NWLR (pt 1066) 18 at 355; and Engr Charles Ugwu v Senator Ifeanyi Ararume  12 NWLR (Pt 1048) 367 at 507. However, by virtue of sec 6(c) of the Interpretation Act (cap I23 LFN 2004), one of the statutory effects of the repeal of an enactment is that the amendment does not affect any right, privilege, obligation or liability which accrued or was incurred under the enactment. This is to ensure that no person is deprived of rights which accrued under the repealed statute and that no-one escapes liability incurred thereunder. See Mrs Christiana Nwabueze v Nigeria Postal Service and Two Others  8 NWLR 9 (pt 983) 435 at 524.
36 Black's Law Dictionary (8th ed, 2003, Thomson West).
37 (1830) 6 Bing 576 at 582.
38 (1829) 9 B&C 750 at 752.
39 (1921) KB 64 at 71.
40 (1881) App Ca 315 at 330.
41 (1968) 3 All ER 1 at 5.
42 (1970) 1 ALR Comm 68.
43 (1969) 1 All NLR 247. For a robust discussion of the principle of the interpretation of tax statutes in Nigeria, see generally: Abdulrazaq, MT “Judicial discretion and interpretation of tax statutes” in (1986) Obafemi Awolowo University Law Journal 106Google Scholar; Sanni, A “Interpretation of tax statutes: An examination of the Supreme Court's approach” in The Uwais Court: The Supreme Court and the Challenges of Development (1995–2006) (2006, Nigerian Institute of Advanced Legal Studies) 74Google Scholar.
44 Above at note 1.
45 The Value Added Tax Act was enacted in 1993, while the Federal Inland Revenue (Establishment) Act was enacted in 2007 to provide a legal basis for FIRS under an independent statute.
46 The Amendment Act came into force on 16 April 2007. See the commencement clause of the act.
47 The Revised Edition Act came into force on 27 May 2007. See the commencement clause of the act.
48 Goodwin v Phillips (1907) 7 CLR 1 at 16.
49 (1887) 36 ChD 573 at 578.
50 See secs 1 and 3 of the Revised Edition Act.
51 See the section above on “Repeal of LFN 1990”.
52 This was the approach adopted by Fasoto, who referred to the table containing the cross references as the “destination table”. His book was published to assist tax practitioners, tax administrators, investors, researchers as well as students of taxation, law and accountancy. Fasoto however went further to state that, “[i]t is instructive to note that the book is not to be used as legal basis for any proceedings”. See Fasoto Nigerian Tax Companion, above at note 22 at v.
53 See generally the section above on “Legal effect of omissions in LFN 2004”.
54 Of the nine executive bills initiated in 2004, the Personal Income Tax (Amendment) Bill, the Petroleum Profits Tax (Amendment) Bill and the National Automotive Council Act (Amendment) Bill are still pending before the National Assembly.
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