An Exposé of Tax Dispute Resolution in Nigeria

Contributor: Ezinne Nnadi Esq.

Just like in any other field, disputes arise in the taxation sector and the mechanism for resolving such issues is an inherent part of the tax administration in Nigeria. It should be noted that Tax Disputes in Nigeria are primarily resolved by the Tax Appeal Tribunal (TAT) and the Courts, the reason being that the judicial powers are vested in Courts, established for the federation and extends to all matters between persons, or between government or authority and to any person in Nigeria, and to all actions and proceedings relating thereto, for the determination of any question as to the civil rights and obligations of that person.

For a court to determine whether it has jurisdiction to preside over any tax dispute, it must be ascertained whether the taxes are federal, state or local government taxes. Having appreciated the peculiar nature of tax matters in Nigeria, administrative channels have been provided for resolving the matters before resorting to proper litigation, seeing that tax matters are exempted from being dispensed with, under any Alternative Dispute Resolution Mechanism.[1]

The focal point of this article is to make an in-depth analysis of Tax Disputes and procedures for resolving same, while considering the various laws and rules governing the due process of dispensing with tax matters.


Tax disputes can be initiated either by the taxpayer or by the Relevant Tax Authority (RTA). Where a taxpayer is dissatisfied with the tax assessment levelled by the RTA, he shall commence by objecting to the tax assessment by way of Notice of Objection which must be done within 30 days of receiving the tax assessment. Depending on whether it is a federal or state tax, the notice of objection shall be made to either the Federal or State Inland Revenue Service to review the tax assessment along the lines of the objection raised. Where the RTA agrees with the objection, the assessment will be amended accordingly. However, where the RTA disagrees with the objection, a Notice of Refusal to Amend (NORA) shall be issued.[2] Within 30 days of the receipt of the NORA, the dissatisfied taxpayer shall file an appeal at the Tax Appeal Tribunal (TAT), or file an action at the relevant federal or state high court.

The next step to be taken by the taxpayer is hugely dependent on the type of tax, as there exist certain differences in the commencement of disputes over different types of taxes. The differences are set out below:

  1. Personal Income tax: Disputes relating to Personal Income Tax may be commenced before the revenue Courts, customary Courts, Magistrates’ Courts, State High Courts, the TAT or the Federal High Court, depending on the jurisdiction of the Court, the amount of tax involved, and whether the action is against the federal or state tax authority.
  2. Corporation tax: Company income tax is a federal tax and all disputes relating to its payment are commenced before the TAT or the Federal High Court.
  3. Wealth taxes: Individuals are not taxed on their net wealth as a separate tax in Nigeria. Property taxes, withholding tax on dividends and capital gains taxes are charged on companies or individuals. Commencement of tax disputes would depend on the taxpayer and the tax base.
  4. Partnerships: For tax purposes in Nigeria, in partnerships, it is the individual partners that are taxed on their respective shares of the partnership profit. Disputes arising out of taxes on the individual partners may be commenced before customary Courts, Magistrates’ Courts, State High Courts, the TAT or the Federal High Court, depending on the jurisdiction of the court, the taxpayer, the amount of tax involved and whether the action is against the federal or state tax authority.
  5. Indirect taxes: Indirect taxes in Nigeria include Value-Added Tax (VAT) and customs and excise duties. As with federal taxes, disputes are initiated at the TAT and the Federal High Court. However, where it involves individuals, the commencement procedure for individuals and partnerships as listed above applies.
  6. Stamp duty: This may be commenced before the State High Courts, the TAT or the Federal High Court depending on whether the duties accrue to the federal or state government, and whether they involve individuals, partnerships or corporations.[3]


Pursuant to the provisions of the Tax Appeal Tribunal (Procedure) Rules, 2021, to commence proceedings before the TAT, the Appellant shall file a Notice of Appeal in Form Tax Appeal Tribunal 1A to be accompanied by the prescribed fees as stipulated in the second schedule to the Rules.[4] The Rules further provide that for an appeal against the Service or the RTA to be competent, the aggrieved person must deposit 50% of the disputed amount into a designated account by the tribunal.[5]

The Notice of Appeal must contain the following:

The grounds of appeal stating whether the whole or part only of a decision is contested;

The exact nature of the reliefs sought;

The names and addresses of all parties directly affected by the appeal;

The address for service on the appellant and respondent.

The Notice of Appeal must be filed concurrently with the list of witnesses, witnesses’ written statements on oath, and copies of every document to be relied on at the trial.[6]

If and unless an order for substituted service is granted, all processes filed are to be served personally on the Respondent. It is noteworthy to state that service here includes an email service or any other form of electronic service.[7] Upon receipt of the filed documents, the Respondent has 30 days within which to file its opposition in Form Tax Appeal Tribunal 3. Proceedings at the TAT are to be held in public, and the onus of proving its case rests on the Appellant.[8]

After hearing both the Appellant and Respondent, the Tribunal may confirm, reduce, increase or annul the assessment, or make any such order as it deems fit.[9] It should be noted that this can be done remotely using virtual platforms.

Any party aggrieved by the final decision of the TAT may appeal to the Federal High Court, by giving notice in writing to the Secretary to the TAT within 30 days of the service of the TAT’s final decision on the party. Failure to appeal within this set time will mean the assessment and demand notices become final and conclusive, or in the case of an action against a decision of the RTA, it means the decision of the TAT is final and conclusive.

It is pertinent to note that by virtue of the Federal Inland Revenue Service Establishment Act, 2007, statutes of limitation do not apply to appeals brought before the TAT, save the provisions relating to time within which to appeal after a NORA and to appeal from a decision of the TAT.[10] Also, statutes of limitation do not apply to actions filed by the RTA for the recovery of any tax.


Since the introduction of the Tax Appeal Tribunal (Procedure) Rules, 2021, many have commended the notable provisions which sought to bring tax administration in par with current trends and technological advancement. However, the precondition of “Pay Now, Argue Later” introduced by the provision of Order 3 Rule 6 of the Tax Appeal Tribunal (Procedure) Rules, 2021, for the TAT to assume jurisdiction, has been a subject of several criticisms since its inception. This is because some experts in the legal space have brilliantly opined that the said provision is tantamount to forced admission of liability before actual adjudication of the dispute, while some are of the opinion that the provision is necessary, to bring tax administration in Nigeria on the pedestal of global tax administration inclinations and standards.

Although, a notable issue that has arisen in light of this provision is whether the said pay now and argue later principle will be applicable being contrary to paragraph 15(7) of the Fifth Schedule to the Federal Inland Revenue (Establishment) Act, which permits such deposits only in certain circumstances.

The paragraph provides that:

“(7) At the hearing of any appeal if the representative of the Service proves to

the satisfaction of the Tribunal hearing the appeal in the first instance that;

(a) the appellant has for the year of assessment concerned, failed to prepare and deliver to the Service returns required to be furnished under the relevant provisions of the tax laws mentioned in paragraph 11;

(b) the appeal is frivolous or vexatious or is an abuse of the appeal process;

(c) it is expedient to require the appellant to pay an amount as security for prosecuting the appeal, the Tribunal may adjourn the hearing of the appeal to any subsequent day and order the appellant to deposit with the Service, before the day of the adjourned hearing, an amount, on account of the tax charged by the assessment under appeal, equal to the tax charged upon the appellant for the preceding year of assessment or one half of the tax charged by the assessment. Under appeal, whichever is the lesser plus a sum equal to ten per cent of the said deposit, and if the appellant fails to comply with the order, the assessment against which he has appealed shall be confirmed and the appellant shall have no further right of appeal with respect to that assessment.”

According to the above provision, it has been opined that the Tax Appeal Tribunal (Procedure) Rules, 2021, being a subsidiary legislation, cannot override the express provisions of the FIRS Act. This controversy has been brought to fore in the decisions of the TAT in the MultiChoice v FIRS cases[11]. In MultiChoice Africa Holdings v FIRS,[12] the TAT struck out an appeal by MultiChoice Africa Holdings against a disputed tax assessment by FIRS a week after it ruled in favour of hearing an appeal by its subsidiary, MultiChoice Nigeria, in a similar case.

MultiChoice Africa Holdings, parent company to MultiChoice Nigeria had appealed against the Companies Income Tax and Value Added Tax assessment notices issued by the FIRS. The company had filed an appeal before the TAT sequel to the $342million tax bill as accessed by the FIRS on it. However, in its ruling, the TAT sitting in Abuja struck out the matter, upholding the Preliminary Objection of the FIRS to the appeal. In its view, MultiChoice Africa had failed to comply with Order 3 Rule 6 of the Tax Appeal Tribunal (Procedure) Rules, 2021 requiring an Appellant to deposit half of the assessed amount being disputed before it can be heard on appeal.[13]

In a contradictory ruling, another TAT sitting in Lagos had dismissed the objection raised by FIRS to the appeal by MultiChoice Nigeria. In that case, MultiChoice Nigeria had objected to the FIRS assessment of N1.8trillion tax covering 10 years, which it alleged was based on presumed turnover figures. The FIRS had insisted that in the absence of a proof of deposit, the tribunal should discontinue the hearing of the appeal and enter judgment against MultiChoice. MultiChoice, however, stated that it had complied, as the referenced section of the FIRS Act does not compel it to pay N900 billion, but an amount equal to its tax in the preceding year of assessment, or one half of the disputed tax assessment under appeal, whichever is the lesser amount plus 10 per cent. In the case decided on October 20, 2021, the tribunal however ruled that MultiChoice Nigeria was free to continue its appeal having complied with the requirements of the FIRS Act.

The Way Forward

The contradictory rulings by the TATs over similar matters underscores clearly the conflict between the FIRS Act 2007 and the new TAT Procedure Rules, 2021. While the FIRS Establishment Act 2007, paragraph 15 of the Fifth Schedule requires an aggrieved taxpayer to pay a deposit of 50 per cent or the last year of assessment tax liability, the lower of the two, the Tax Tribunal Procedure Rules 2021, which replaced the 2010 Rules, mandates that a taxpayer who intends to appeal must first pay 50% of the disputed tax into an account designated by the TAT as security for the appeal. In addition, the taxpayer must file a deposition along with the appeal to that effect. In the two MultiChoice cases in reference, while the Abuja TAT relied on the 2021 TAT Procedure Rules in its ruling, the Lagos Tribunal relied on the FIRS Act 2007.[14]

In any case, what is germane is that legislative intervention is undoubtedly needed in order to ensure that the menace of conflicting rulings on matters of Tax appeal, is put to an end.


The resolution of Tax matters is an area of Dispute Resolution which requires keen attention, seeing that same cannot be a subject of arbitration in Nigeria. It is significant that notable provisions like the Tax Tribunal Procedure Rules 2021 and the likes are highly encouraged, and that the primary legislation being the FIRS Act is being amended, to conform with the global trends in tax administration.


  1. SNEPCO & Ors v FIRS (Unreported) CA/A/208/2012, Judgment delivered on 31 August 2016; Esso Exploration & Production (Nig) Ltd & Anor v. FIRS & Anor (2017) LPELR-51618(CA)
  2. Section 69 Companies Income Tax Act Cap. C21, Laws of the Federation of Nigeria, 2010
  3. E. Uwa et al., ‘The Tax Disputes and Litigation Review: Nigeria’ < > Accessed 12 March, 2022
  4. Order 3 Rules 3 & 4 of the Tax Appeal Tribunal (Procedure) Rules 2021
  5. Ibid. Order 3 Rule 6.
  6. Ibid. Order 7 Rule 4.
  7. Ibid. Order 8 Rule 1.
  8. Ibid. Order 17 Rule 9.
  9. THISDAY, ‘FIRS-Multichoice: The Twist’ <> Accessed 9 March, 2022.
  10. Henry Ojelu ‘Lawyers, Experts fault 50% Compulsory Deposit for Tax Appeals’ <> Accessed 17 March, 2022.

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