Against the background of claims by MultiChoice that Nigeria’s tax authority, the Federal Inland Revenue Service (FIRS) does not have legal basis to review Multichoice’s self-assessment of tax due to it, legal and tax experts have disagreed with those claims stating that the tax authority can independently make assessments as empowered by its Establishing Act.
Recall that Multichoice Nigeria has appealed the assessment of the FIRS in the Tax Appeal Tribunal arguing against the assessment.
Airing their opinions at separate occasions, some tax experts and lawyers have opined that the Nigerian tax law empowers the FIRS to reject and review any tax assessment which the tax authority finds wanting.
Uban Dona, a finance expert explained that Assessment Review is a process in the self-assessment system where the tax authority can either accept or reject the assessment presented by a taxpayer.
“Self-Assessment regime gives the taxpayer the latitude to self-assess himself or herself. But it does not preclude the authority from reviewing the taxpayer’s assessment. The tax authority will review your assessment based on known tax parameters. If your self-assessment effort is correct, the tax authority will give you a pass; but if your self-assessment effort is wrong, the tax authority will reject it and give you what it thinks is the right assessment,” he said.
He went further to add that in the case of MultiChoice, the communications giant erred by thinking that its self-assessment was infallible.
Uban Udoma noted that should MultiChoice raise objection to FIRS assessment, MultiChoice has right under the law to approach, first the Tax Appeal Tribunal for determination of its case and thereafter the Federal High Court as the case might be.
Section 69 of the FIRS Act recognises Revision of assessment in case of objection. Subsection (1) provides as follows: “If any company disputes the assessment it may apply to the Service, by notice of objection in writing, delivered in person, by courier service, email or any other electronic means…”
Barr. Wura Ajibade, a lawyer made reference to Sections 65-70 of the FIRS Establishment Act, 2007 which empowers the Service to assess taxpayers and review any assessment done by taxpayers.
“Section 65 (1) of the FIRS Establishment Act, 2007 states: “The Service shall proceed to assess every company chargeable with tax as soon as may be after the expiration of the time allowed to such company for the delivery of the audited accounts and return provided for in section 55 of this Act or otherwise as it appears to the Service practicable to do so; (2) Where a company has delivered audited accounts and return, the Service may—(a) accept the audited accounts and return and make an assessment accordingly; or (b) refuse to accept the return and, to the best of its judgement, determine the amount of the total profits of the company and make an assessment accordingly.
“(3) Where a company has not delivered a return and the Service is of the opinion that such company is liable to pay tax, the Service may, according to the best of its judgement, determine the amount of the total profits of such company and make an assessment accordingly, but such assessment shall not affect any liability otherwise incurred by such company by reason of its failure or neglect to deliver a return.
“(4) Nothing in this section shall prevent the Service from making an assessment upon a company for any year before the expiration of the time within which such company is required to deliver a return or to give notice under the provisions of section 55 of this Act, if the Service or any officer of the Federal Inland Revenue Service duly authorised by the Service considers such assessment to be necessary for any reason of urgency.
“(5) In this section, the reference to a return shall be construed as a reference to the accounts and return submitted pursuant to section 55 of this Act”, she highlighted.
She went further to add that Section 66 of the FIRS Act provides for Additional assessments.
Section 66 (1) says: “If the Service discovers or is of the opinion at any time that any company liable to tax has not been assessed or has been assessed at a less amount than that which ought to have been charged, the Service may, within the year of assessment or within six years after the expiration thereof and as often as may be necessary, assess such company at such amount or additional amount, as ought to have been charged, and the provisions of this Act as to notice of assessment, appeal and other proceedings shall apply to such assessment or additional assessment and to the tax charged thereunder:
“Provided that where any form of fraud, wilful default or neglect has been committed by or on behalf of any company in connection with any tax imposed under this Act or under the Companies Income Tax Act, 1961 the Service may at any time and as often as may be necessary, assess such company at such amount or additional amount as may be necessary for the purpose of making good any loss of tax attributable to the fraud, wilful default or neglect.
“For the purpose of computing under subsection (1) of this section the amount or the additional amount which ought to have been charged, all relevant facts consistent with the proviso to section 76 of this Act shall be taken into account even though not known when any previous assessment or additional assessment on the same company for the same year was being made or could have been made”, she said.
