Nigerian Tax Law

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Multiple Taxation of Corporate Entities in Nigeria: Suggestions for Foreign Corporate Entities January 2009 Vol. 22: Issue 1 As the Technical Committee on the Nigerian National Tax Policy winds up its facts-gathering exercise, a major problem in Nigerian tax administration demanding urgent and decisive action is the phenomenon of multiple taxation of business, especially, foreign-owned business in Nigeria. It has long been pointed out by many tax lawyers and commentators that the tax regime in Nigeria is severely afflicted by the multiplicity of taximposing and tax-collecting entities at federal, state, and local government levels. This phenomenon is particularly acute with respect to foreign-owned businesses which are often targeted by tax-imposing “authorities” on the mistaken belief that such foreign-owned businesses have deeper pockets than their local counterparts.

operators by revenue officials from the three tiers of governments increases the costs of doing business. Beyond that, the phenomenon raises fundamental questions about the constitutionality of the multiplicity of taxes imposed on business entities in Nigeria. It is heartening to note that in a landmark ruling of the Federal High Court of Nigeria in 2007, the court restrained local government councils from collecting and imposing taxes and levies outside what are constitutionally provided for. Indeed, the Nigerian Constitution itself does not authorize the imposition and or/collection of taxes or levies by local government councils. Tax collectors in Nigeria have a reputation for corruption. There is strong evidence that corrupt tax collectors or ignorant local council officials sometimes abuse the tax regime to make extortionate and or/illegal tax impositions. Yielding to such blackmail or extortionate demands entrenches an illegal but lucrative system.

In the third and fourth quarters of 2008, the business community reported that it was weighed down with the problem of multiplicity of taxes and levies imposed on businesses by the three tiers of governments.

Business entities are well-advised not to offer bribes to tax officials. The prudent course of action when businesses are faced with illegal and extortionate taxes and levies is to take legal action in the appropriate courts. Our experience suggests that confronting the extortion head-on is often the better recourse.

The incidence of tax duplication and undue harassment of private sector

The government is advised to speed up the establishment of the Tax Appeals

©Blackfriars LLP 2008. All rights reserved. This document is for general guidance only. Definitive advice should be sought from counsel if required. Blackfriars LLP is a Nigerian law firm with a representative office in Toronto, Canada.

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Tribunals. This would consolidate on the current status of the Body of Appeal Commissioners.

For further inquiries, please contact: Ms. Nkeiru Onyeaso Tel: +234 808 718 0833 Email: [email protected] Fax: +234 1 2694781 Dr. Virtus Igbokwe Tel: +234 802 220 4755 Email: [email protected] Fax: +234 1 2694781 Ms. Clara Ndive Email: [email protected] Tel: +234 803 323 1868 Fax: +234 1 2694781

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©Blackfriars LLP 2008. All rights reserved. This document is for general guidance only. Definitive advice should be sought from counsel if required. Blackfriars LLP is a Nigerian law firm with a representative office in Toronto, Canada.