Claimants against FIRS to pay 50% into court account in tax dispute – Claimants who plan to institute legal action against the Federal Inland Revenue Service (FIRS) on disputed taxes now have to pay 50 per cent of the assessed amount in dispute into an interest-yielding account of the Federal High Court before the court can hear such matters.
Executive Chairman, Federal Inland Revenue Service (FIRS), Mr Muhammad Nami, said this at a public hearing organised by the House of Representatives Committee on Public Accounts investigating revenue leakages from tax waivers and incentives to foreign companies granted pioneer status.
According to him, the new rule is contained in a recent Practice Direction issued by the Chief Judge of the Federal High Court, Abuja, Hon. Justice John Terhemba Tsoho, under Order 57 rule 3 of the Federal High Court (Civil Procedure) Rules, 2019. He also confirmed that the Practice Direction took effect from 31 May 2021.
Nami also stated that the Management of FIRS has initiated a process for a Memorandum of Understanding (MoU) with critical stakeholders as far as information sharing and amendments to the relevant laws are concerned.
He added that the FIRS has gotten several amendments to its tax laws which require companies operating in the Free Trade Zones to file tax returns on their operations to the FIRS.
According to him, these amendments were aimed at checking the activities of taxpayers currently taking advantage of some gaps in tax laws and fiscal policy by establishing businesses in the nation’s tax-free zones.
He pointed out that such companies produce goods that are meant for export and then sell the goods to the country’s custom’s zone thereby making it impossible for the companies operating in the custom’s zone to operate competitively with them.
However, as part of efforts to attract investment vis-a-vis raising revenue for the government, he also hinted that as a first step, FIRS has set up a high-power committee which is made up of senior officials of FIRS and the National Investment Promotion Commission(NIPC) to look into issues patterning to tax waivers and granting of pioneer status.
In order to tackle the twin challenges of tax evasion and tax avoidance, he urged the National Assembly to, as a second step, amend the relevant tax laws that would make it almost impossible for these companies to exploit loopholes in tax laws to shift both profits and taxes to their countries of origin.
He pointed out that taxes not paid to Nigeria or waived by the Nigerian government are returned to the treasury of defaulting companies’ home countries operating in Nigeria, hence the need for legislation to address the issue.The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Financial Watch. Every investment and trading move involves risk. You should conduct your own research when making a decision.