Nigeria: Six-year limitations period applies for tax audits, absent fraud or willful default or neglect

Nigeria: Limitations period applies for tax audits

The Tax Appeal Tribunal (sitting in Benin) issued a decision holding that the tax authorities must prove that there was fraud, willful default or neglect in order to invoke the tax law provisions that allow an investigation of taxpayers beyond the standard six-year statutory period.


The case is: Citibank Nigeria Ltd. v. Rivers State Board of Internal Revenue

The state tax authority in August 2018 notified the taxpayer of an intention to conduct an investigation of the pay-as-you-earn (PAYE) tax liability for 19 years (for the period covering 1999 to 2017). The taxpayer responded, stating its inability to provide documents beyond the six-year provided for document retention as required by a provision of the Companies and Allied Matters Act, 1990, and requested a meeting with the tax authority. The state tax authority, however, did not respond to the meeting request and issued a “best of judgment” (BOJ) assessment for ₦303.9 million (including penalties and interest) in respect of PAYE taxes for 2006 to 2017 (that is, covering a 12-year period).

The taxpayer disagreed and eventually filed suit.

The tribunal held that the state tax authority had failed to prove that the taxpayer had committed any act of fraud, willful default or neglect and that, therefore, the six-year statute of limitation barred an audit or investigation of years earlier than 2012.

Read a December 2020 report [PDF 910 KB] prepared by the KPMG member firm in Nigeria

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