Taxpayers relieved from tax investigation beyond six years unless tax authorities can prove fraud, neglect etc

Taxpayers relieved from tax investigation beyond 6yrs

The Tax Appeal Tribunal (TAT or “the Tribunal”) sitting in Benin on 8 October 2020 decided in Citibank Nigeria Limited (Citibank or “the Appellant”) and Rivers State Board of Internal Revenue (RSBIR or “the Respondent”) that tax authorities must prove that a taxpayer has committed fraud, wilful default or neglect in order to invoke the provisions of Section 55(2) of the Personal Income Tax Act, Cap P8, Laws of the Federal Republic of Nigeria (LFN), 2004 (as amended) (PITA) to investigate taxpayers beyond the six-year statutory period.

Wole Obayomi

Partner, Tax, Regulatory & People Services

KPMG in Nigeria


Facts of the Case

In August 2018, RSBIR notified Citibank of its intention to carry out a back-duty Pay-As-You-Earn (PAYE) tax investigation of the Appellant’s records for a nineteen (19) year period covering 1999 to 2017 financial years (FYs). The Appellant responded to the notice stating its inability to provide documents beyond the six (6) years provided for document retention by Section 332(2) of the Companies and Allied Matters Act, 1990, CAP C20, LFN, 2004 (CAMA), and requested for a meeting with the Respondent.

The Respondent, however, ignored the Appellant’s request to meet and issued a best of judgment (BOJ) assessment amounting to ₦303.9 million (including penalty and interest)
in respect of PAYE taxes for 2006 to 2017 FYs, covering a twelve (12) year period. The Appellant disagreed with the BOJ tax assessments and objected in writing within the statutory 30-day period, reiterating its earlier position. Further, the Appellant reminded the Respondent that some of the documents requested for 2010 to 2015 FYs have been previously submitted to the Special Tax Audit Reconciliation Committee of the Respondent. The RSBIR, however, re-issued the BOJ tax assessment as final and conclusive.

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