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  • Govt targets passage of new tax laws in Q3

    Govt targets passage of new tax laws in Q3

    New tax laws are expected before end of this year, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, said yesterday.

    According to him, ten amendment bills have been sent to the National Assembly to address constitutional issues, including overlapping taxing rights.

    He said the committee drafted new tax bills instead of amending old ones.

    “We took the view that amending outdated laws inherited from our colonial past was insufficient. Instead, we drafted new laws entirely.

    “Our goal is to ensure clarity and avoid the suffering caused by conflicting taxes such as VAT and state-level consumption taxes,” Oyedele said.

    The comprehensive reform approach is expected to culminate in the enactment of new laws by the end of the third quarter.

    Some reforms, like the withholding tax regulation, may take effect this year, Oyedele said.

    He also said the collection of Value Added Tax (VAT) on food items, healthcare, housing, education and transportation will soon end under a new policy.

    “The majority of our population, over 130 million, spend almost their entire income just trying to survive.

    “Therefore, it doesn’t make sense to try to extract taxes from them. They have no ability to pay.

    “We have designed a new national fiscal policy for Nigeria that addresses how our taxes should be structured, protecting the poor and ensuring that wealthier individuals contribute more while leveraging technology for tax collection,” Oyedele said.

    He added that states will get a VAT revenue boost by 90 per cent if they agree to discontinue the collection of consumption taxes.

    He believes the proposed VAT increase will benefit state governments if they accept the collection adjustment.

    Oyedele said: “We asked the states to discontinue consumption taxes as they are duplicating VAT.

    “In compensation for that, their share of VAT revenue will go up to 90 per cent.

    “The five per cent added is more than double what they collect as consumption taxes, so it is a win-win for them.”

    He said President Bola Ahmed Tinubu has approved a new withholding tax policy, which replaces the one introduced in 1977.

    The new policy introduces significant reforms designed to alleviate the heavy burden that the previous system imposed on farmers and Small and Medium Enterprises (SMEs).

    According to Oyedele, small businesses will now be exempt from withholding tax compliance, reducing their administrative and financial burdens.

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    Businesses with low-profit margins will benefit from reduced withholding tax rates, easing their cash flow and operational costs.

    Producers, particularly farmers, will receive exemptions, fostering growth and sustainability in these critical sectors.

    Oyedele, who was a guest on Channels Sunrise Daily, said the new measures aim to enhance compliance and reduce tax evasion and avoidance.

    The policy streamlines the process of obtaining credit and utilising tax deducted at source, making it more accessible for businesses.

    Updates to the new withholding tax regime will reflect emerging issues and align with global best practices.

    Oyedele said: “Businesses, especially SMEs, faced ambiguities regarding compliance, eligible transactions, applicable rates, and remittance timing.

    “This complexity resulted in an excessive compliance burden and strained working capital for low-margin businesses.”

    According to him, the previous system treated withholding tax separately, adding to the list of multiple taxes and increasing the cost of doing business.

    Besides, obtaining refunds for excess withholding tax was problematic, causing further financial strain on businesses.

    The lack of an exemption threshold made compliance costs uneconomical for taxpayers and enforcement costs high for tax authorities.

    Oyedele said a withholding tax regulation is presently with the Ministry of Justice for gazetting.

    “This move will provide significant relief to businesses, particularly small businesses, by reducing the pressure on their working capital,” he said.

  • Lawyer seeks review, enforcement of tax laws

    The Managing Solicitor of TRIAX Solicitors, Moses Oruaze Dickson, has called for the review of the legislative framework for tax and taxation in the country.

    Dickson spoke at the annual 20th tax conference with the theme: Institutionalising a Tax-Paying Culture, at the Nigerian Air Force Conference Centre in Abuja, the nation’s capital.

    The lawyer recalled that the last time there was any legislative review of the nation’s tax laws was in 1976.

    He said this makes the tax laws to be obsolete for a progressive society like Nigeria.

    Dickson noted that even though Nigeria is not a tax haven, it is easy to do business in the country without paying tax, as required.

    The lawyer said while businesses operating in Nigeria are willing to pay taxes to protect their reputation, the loopholes in the tax laws create opportunities for such companies to evade taxes without being penalised.

    Oruaze also emphasised that if solid legislations are put in place and enforced, they will impact on the tax-paying culture of Nigerians and companies operating within its territory.

     

  • ‘Why tax laws must be amended’

    ‘Why tax laws must be amended’

    Chukwuemeka Eze is the publisher/editor-in-chief, Media Law Reports. A tax consultant, he was Chairman of Chartered Institute of Taxation of Nigeria (CITN), Ikeja branch from 2009 to 2011. He is the Legal Adviser, West African Union of Tax Institutes (WAUTI) and the Legal Adviser, Association of African Institutes (AATI). In this interview with John Austin Unachukwu, he speaks on taxation and sundry issues.

    The dwindling income from crude oil export has made diversification of the economy crucial. Can taxation bridge the gap?

    What is happening to Nigeria is what happens to every economy that derives its mainstay from natural resources. Such economy is susceptible to the vagaries of the international price regime. Nigeria had opportunities to build a strong economy prior to this day, but we blew the opportunity through shortsightedness of our leaders and profligacy. We created a Sovereign Wealth Fund (SWF) without the political will to save for the rainy day. We developed our tourism sector only in theory. Importation of goods and consumerism became our national attitude. Our education continues to produce graduates without entrepreneurial skills thereby creating a generation of unemployed and unemployable youths. Nigeria is suffering from the “Dutch Disease” or what is known as “Resource Curse”. This implies that our natural resources, in this context crude oil, has become a curse to us – it has made us lazy. Our leaders have refused to think outside the box because they are certain that the Federal Accounts Allocation Committee (FAAC) will share the monthly receipts in the Federation Account. Unfortunately, the amount being shared by the states and the Federal Government has become so little to the extent that states are finding it extremely herculean to carry out their basic functions.

    What forms of revenue generation are available to states?

    One is through the stock market, which is not attractive. Another is bank borrowing. Many states have resorted more to this avenue in recent times. This may be quicker to obtain, but it is laden with mines. Once the terms are acceptable to the bank’s board, it may approve the loan subject to these conditions, among others: that the state should patronise the bank, including domiciling its internally generated revenue (IGR) with the bank; that the House of Assembly should approve a resolution in favour of the loan; and granting the bank an Irrevocable Payment Order on an agreed sum against the state’s allocation from the Federation Account.

    The Accountant-General of the Federation might play the role of deducting the agreed sum at source and remitting the same to the bank. As good as this method may be, one  shortcoming is that it is not sustainable.

    The other option is appealing for financial assistance from the Federal Government by way of gift or loan. This is what many Nigerians know now as bailout. This option has been tried twice since May 29, 2015, yet it has not cured the financial illness of the beneficiaries. This is also not sustainable.

    Investment in agriculture is another means of generating revenue but considering our reliance on non-mechanised or traditional means of farming, it will take at least three years before a state will begin to reap from such investment. You know that each state governor has a four-year tenure though this can be extended  to eight years when re-elected. This is the reason most of them pay lip service to agriculture. Moreover, Nigerians need re-orientation to deliver on agriculture on a sustainable basis.

    Investment in solid minerals is a long-term project. It is capital intensive and complicated. It cannot be done on a large scale without the cooperation of the Federal Government, which takes time in maturing. Certainly, this form of revenue generation is for the future. The most sustainable way of generating revenue for the states, until the constitution is amended to favour them, is taxation.

    The revenue of the states can also be increased if the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) revises the revenue allocation formula in favour of the states.

    How is taxation the most sustainable means of revenue generation?

    The four purposes of taxation, known as the 4Rs, are revenue, representation, redistribution and repricing. Of all these purposes, revenue generation is the most pronounced and that is the purpose most interesting to every government. Taxation is sustainable because you can use your database of taxpayers to determine the approximate revenue yield that will accrue to the state within an accounting year. The income from taxation is not static, but by accounting prognosis, a tax collector can hazard a guess as to how much to expect as income within a given period. For instance, the Lagos State Government already knows that its average tax yield for each month is above N20 billion. This means that Lagos expects a minimum of N240billion from taxes and levies yearly and N960billion in four years. The implication is that whoever is a governor in Lagos can plan his programmes within the ambit of this revenue. Whatever comes from Federal Allocation will be regarded as extra revenue. In this way, it becomes easier to plan and execute the budgets of Lagos State.

    From records, Lagos State Government has the highest budget performance of all states. This is the consequence of its prowess in tax collection management. No wonder that the Federal Government has promoted the Fowler-led Lagos team to the centre in Abuja to recreate the Lagos wonder.

    Where does taxation fit into the theme of this year’s NBA Annual General Conference, which is Democracy and economic development?

    It is common knowledge that one cannot be taxed or levied unless the tax or levy has been created by law. To build a buoyant economy, there is need to amend our tax laws to allign with the reality of the times. The National Tax Policy of 2012 encourages  direct taxes, such as Companies Income Tax and Personal Income Tax and increasing indirect taxes, such as Value Added Tax. The law-making process should be used to strengthen this policy. The clamour by government officials for increase in Value Added Tax without a campaign for decrease in companies income tax seems to me as being contrary to the spirit and letter of the National Tax Policy.

    What do you make of the National Tax Policy Review Committee?

    The Federal Government has demonstrated its seriousness in reviewing the tax policy regime by inauguration the National Tax Policy Review Committee headed by Prof. Abiola Sanni of the Faculty of Law, Univbersity of Lagos. With experience of the chairman, I expect the eight-man committee to deliver a memorable document. I expect them through their recommendation to give room for the legal personality of the Joint Tax Board, to end the challenges of multiple taxation, and to quench the controversy dogging the Taxes and Levies (Approved List for Collection) Act, Cap T2, Laws of the Federation of Nigeria (as amended in 2015).

    What was the outcome of the Joint Tax Board meeting in Abeokuta last month?

    The theme of the meeting, Presumptive tax regime for informal sector: A leeway to grow IGR, was chosen to prepare tax collectors for the implementation by section 36(6) of the Personal Income Tax Act (as amended). The Presumptive Tax Regulations, wherever gazette by the Minister of Finance is intended to serve as the basis of taxation of the taxpayers dominating the informal sector.

    You were at the ECOWAS workshop on Trade in Services Liberation within the sub-region. Were there issues discussed which you consider useful to the legal or tax profession?

    It should be observed that while trade liberalisation within ECOWAS has achieved a substantial level of implementation, services liberalisation is still negligible. The economies of countries within the EU derive large portions from activities in the services sector. It should be of interest to lawyers to campaign for a legal regime, which will allow Nigerian lawyers to represent them within ECOWAS with minimal conditions and vice versa. Such movement of personnel in the banking, construction, tourism and other sectors will require a new legal regime. Such movement or establishment of business entities across the borders have their tax implications. There is, therefore, the need for capacity building to create a database of experts in governmental, ministries, departments, agencies and non-governmental organisations who can participate in negotiations involving these and more elements at the  appropriate time. This was the basis of the workshop. I participated as the Legal Adviser of the West Africa Union of Tax Institutes (WAUTI).

  • FG redrafting tax laws  – Adeosun

    FG redrafting tax laws  – Adeosun

    The federal government has commenced the redrafting of the nation’s tax laws.

    Minister of finance Mrs Kemi Adeosun made this disclosure Thursday in Abuja when she met with tax experts.

    According to Adeosun, “An overhaul of our tax code is long overdue as so is the redrafting of our tax laws to reflect current business practices and new trends.  We must respond to the growing phenomenon of base shifting and other practices that allow companies to evade their fiscal and legal responsibilities.”

    She disclosed that the Federal Government plans to engage with relevant members of the National Assembly to ensure that required revisions, amendments and new laws can be passed expediently to keep pace with the rapid change in business practices.

    The Minister explained that the nation’s tax system must be dynamic in order to respond to an ever-evolving commercial landscape and to increasingly technology-driven business models.

    She stated that the Federal Government, as part of the drive to increase non-oil revenue, has set an aggressive target for increasing tax collection.  This, according to her, is a reflection of the fact that the current level of compliance is low and in some cases, the effective tax rate paid by those that are compliant is lower than expected.  She added that the commendable administrative efforts of FIRS would be complemented by an overhaul of the tax code and tax laws.

    She further stated that “We will critically examine our GDP to align taxes with economic activity in our bid to block all leakages. For example, the multi-billion naira losses being identified in our solid minerals sector by illegal and undocumented miners will be addressed with increased formalisation and review of the governing laws. Indeed, we are committed to the continuous improvement of our tax system as part of a dynamic framework. We will use tax administration and technology to widen compliance and encourage more individuals and companies into the tax net”, adding that the Federal Government is already investing in technology to boost the efficiency of our collections.

    According to her, some of the recent initiatives being implemented in the Ministry of Finance mean that it is now virtually impossible to obtain a payment from the Federal Government without being fully taxed compliant.

    Promising that tax revenues will be judiciously utilised going further, Mrs. Adeosun stated that tax payment is part of the social contract between Government and people and that the most effective measure to enhance compliance is the knowledge that tax revenues are being utilised effectively for the development of the people. The Minister explained that the Federal Government is already implementing public financial management reforms to strengthen financial controls and ensure greater accountability, while the government is also making progress to ensure value for money in every naira spent in its efforts to reduce overhead and increase the efficiency of government expenditure.

    She explained that growing the economy at a rate that will address the employment needs of our huge population requires a fundamental change in how government collects its revenues and spends.The Minister said Government is committed to making sure that every naira counts.  “We have strengthened our controls and made significant progress in enhancing the effectiveness of our financial expenditure in bringing development to Nigeria.”

    The Minister further commented that “the commercial opportunities in Nigeria, despite our current challenges, are compelling and I am happy to report that we are now witnessing an increasing level of interest from long term investors who are keen to participate in the Nigerian upside as this government begins to position Nigeria to attain its true potential. It is particularly gratifying that the majority of these enquires relate to the non-oil sector.  However, as encouraged as I am about these developments, I am concerned about the ability of our tax system to adequately develop and deploy effective measures to ensure that government revenue is mobilized in line with these developments.”

     

  • Assessment procedure (1)

    The overriding objective of assessment function is to ensure that all taxpayers, within a defined tax jurisdiction, are brought into the tax net and assessed correctly in order to plug all possible leakages. Generally, taxpayers are categorised according to the legal status of their businesses which includes the following:

    • Individuals/Enterprises, usually sole proprietorship or self-employed

    • Partnership, association of two or more persons coming together in business with a view to making profit.

    • Corporate entities/Public companies, usually limited by shares

    • Non-Governmental Organisations, usually unlimited or limited by guarantee.

    A brief description of each of the above business entities will help in the understanding of their respective duties and obligation under the tax laws.

    Individual/Enterprises: This is a taxable person who is chargeable to tax in his own name or in the name of a receiver, or his agent. Usually, the tax affairs of this category of taxpayers are to be handled by the State Internal Revenue Service (SIRS), where the taxable person domiciled or resides. Individuals are assessed to tax under the Personal Income Tax Act (PITA).

    Partnership: This category of businesses is assessed to tax under the Personal Income Tax Act (PITA) in the same manner as individuals/enterprise. In Nigeria, Partners are assessed in their individual names, based on the share of partnership profits allocated to them.

    Non-Governmental Organisations: These are non-profit making organisations which are qualified for income tax exemption under Section 23(1)(i) of CITA C21 LFN, 2004). They are often unlimited or at best limited by guarantee. These types of organisations have duty to apply for exemption. The form in which NGOs are registered determines which Tax Authority will handle their tax affairs.

    Corporate Entities/Public Companies: These are limited liability companies or public companies registered with profit – motive in mind. Their tax affairs are being handled by the Federal Taxing Authority.

    Assessment function in an Integrated Tax System is agreed to include filing and assessment duties with respect to all taxes being collected by that office among which are: PPT, CIT, VAT, WHT, CGT etc.

     

    Classes of Assessment

    Assessments are normally raised on the Income or Profit of companies or corporation raising from trade or business carried on in Nigeria. Assessment is to be imposed on the ‘‘Profit’’ of an enterprise in relation to an accounting period. There are two (2) principal classes of assessments, namely;

    Self-Assessment: This assessment scheme aims at shifting the duty of raising of assessment to the taxpayers themselves. Under this system, the taxpayer is expected to accompany its tax returns with self-assessment notice and an evidence of payment to the FIRS through appropriate designated collecting bank.

     

    Government Assessment:: This is an assessment raised on behalf of the Government by the Tax Authorities, examples of which are:

    • Assessment raised in accordance with audited accounts and computations filed by the taxpayers.

    • Administrative assessment based on physical assessment of the company or profit perceived to be fair and reasonable.

    • Protective/jeopardy assessment.

    • Amended/additional assessment.

     

    Types of Assessment

     

    Assessments Based on Taxpayers’ Returns

    These are assessments based on the information contained in the taxpayer’s returns. The tax computations together with the capital allowances computations are enclosed along with the audited accounts and such assessment could either be self-assessment or government assessment.

     

    Minimum Tax

    Minimum Tax is payable by every company in Nigeria when the total profits of the company from all sources have produced on tax, or tax payable which is less than the minimum tax specified by the law. However, the followings are exempted from the payment of minimum tax:

    • Companies engaged in agricultural trade or business.

    • Companies with at least 25 per cent imported equity capital.

    • Any company for the first four years of its commencement of business.

    The rates applicable to companies which are liable to minimum tax is the highest of any of the following:

     

    • 0.5 per cent of Gross Profit

    • 0.5 per cent of Net Assets

    • 0.25 per cent of Paid-up Share Capital

    • 0.25 per cent of Turnover of up to N500, 000.

     

    If however the turnover is higher than N500, 000, the minimum tax payable will be the highest of the above plus 0.125 per cent of the excess of the turnover above N500, 000.

     

    Treatment of Capital Allowances

    when Minimum tax is applicable

    It is important to note that in any year of assessment when minimum tax is chargeable, the capital allowance due in that tax year must be adjusted against the profit of that year along with the unabsorbed balances brought forward. This treatment is adopted to ensure that the charging of minimum tax does not preclude the deduction from assessable profit and the utilisation of capital allowances for that year. The position of the law is that capital allowances should be deducted as far as possible, from the assessable profit of that year and the unabsorbed portion, if any, shall be carried forward.

     

    Minimum Tax on Dormant Cases

    Minimum Tax is justified on the theoretical premise that every asset should generate an income and it is applied as an anti-tax avoidance measure. This tax is sometimes referred to as asset tax. Already, it is being applied in that manner during periods of dormancy in the sense that minimum tax is computed and charged on net asset or share capital, whichever is the higher of the two. The aim of this clarification is to ensure uniformity in the application of the law on minimum tax with respect to dormant cases. Minimum tax should be computed although the assessment may be raised when the business eventually recommences.

     

    Best of Judgment Assessment

    This is raised where audited accounts and other relevant returns are not submitted within the stipulated time in line with the tax law. It is usually based on “fair and reasonable’’ estimate of income/profit of the preceding year’s results reported by the company.

     

    Amended/Revised Assessment

    Where accounts are submitted and the basis of the assessment is faulted, the original assessment earlier made is revised or amended in line with the new information as disclosed in the tax computations.

     

    Additional Assessment

    The Board is empowered to examine the returns submitted by taxpayers in order to ensure that the presentation of the accounting details conform with provisions of the Income Tax Act. Unapproved claims and allowances discovered are disallowed and added back to profit. This, in addition to other information will form the basis for additional assessment. All rules and regulations governing other assessments also apply to additional assessments.

     

    Jeopardy/Protective Assessment

    These assessments are raised on the ground of expediency. If the relevant tax authority is of the opinion that such assessments are necessary for any reason of urgency, which may include the following:

     

    • Where a case referred to the Board for ruling is yet to be determined.

    • Imminent liquidation of a company or an intention to dispose of its valuable assets, the result of which may cripple its operation.

    • Imminent sale or transfer of trade/business of the company to another.

    • Intended remittances to foreign partners.

    • Payment being made to a taxpayer who had hither to been evading tax.

    • Imminent escape by a taxpayer to foreign counties.

    • in all other cases of emergency.

     

    Assessment on Turnover

    Under Section 30(1) (a) and (b) of CITA C21 LFN, 2004, the Board is empowered to assess on the turnover of the taxpayer’s business. Where it appears that the trade or business produces no assessable profits or declare turnover that is less than might be expected to arise from such trade or business. Such an assessment is made by assuming a fair percentage of turnover as assessable or adjusted profit for the year to which capital allowances and other deductions are charged before arriving at total profit, And then applying the current rate of tax to determine tax due for the year.

     

    Assessment Levied on Dividend Provision where no Tax is Computed or Payable

    Section 19 of CITA empowers the Board to raise assessment on amount of dividend paid to shareholders as if such dividend declared is the total profit of the company for the year of assessment to which the accounts relates. Such a situation may arise where a company declares dividend to its shareholders when it has no tax payable reported as a result of:

    • No total profits; or

    • Total profits which are less than the amount of dividend paid.

    In all case where dividend is declared, officers should always compare the total profits to the amount of dividend declared.

    Other assessments/Levies

    There are other levies or imposition usually encountered in the course of assessment duties, among which are:

     

    Penalty for late returns:

    Penalty is normally imposed when a taxpayer’s audited accounts and tax computations are submitted late to the Revenue Authority. The amount of penalty at present is N25,000 for the first month in which the failure occurs and N5000 for each subsequent month of failure. It is a form of assessment raised whenever the returns are submitted late. The amount is subject to review from time to time at the discretion of Government.

    Pre-Operational Levy:

    This is levy imposed on companies which fail to commence business within six months after their incorporation. The levy is N20, 000 in the first instance and N5000 for any other year, if it still has not commenced business.

    It is to be levied when the taxpayer applies for current Tax Clearance Certificate (TCC). Pre-operational levy should not be imposed for any previous years when the Company did not apply for TCC; neither should it be raised in arrears to cover earlier years.

     

    Education Tax Levy:

    This is a levy being imposed on all taxable companies in Nigeria to assist Government in the development of education in Nigeria. It is charged at the rate of two per cent of the assessable profit and should be assessed alongside the normal tax assessment for each year. Pioneer Companies are usually not assessed to Education Tax in view of the income exemption status from tax payment that they enjoy during the pioneer period.

  • Tax enforcement: Investigation and litigation under tax laws

    Tax enforcement: Investigation and litigation under tax laws

    Part 2

    i. Investigation of tax offences by FIRS:

     

    The Black’s Law Dictionary defines the verb ‘Investigate’ as: to inquire into a matter systematically; to make a suspect the subject of criminal inquiry….to make an official inquiry.

    It is often said that a good investigation begets a good prosecution and vice versa. Therefore it is best practice for the investigator to compare notes from time to time with the Prosecuting Counsel in course of his investigation.

    Generally, Tax Investigation is undertaken by the Tax Investigation & Special Enforcement Department (TISED) of the Service. Specific offences arising from petitions to the Executive Chairman’s office are investigated by the Special Enforcement Unit (SEU) of the Service. Apart from regular staff of FIRS, Special Purpose Tax Officers (SPTOs) are also utilised by the Service to undertake its investigations.

    The Investigation process entails review of Petitions or Information received from the ECFIRS or Whistle Blowers, interviewing Witnesses and suspects, recording of statements from witnesses and suspects under caution, writing of letters to authenticating bodies and writing Investigation Reports (Interim and Final reports) and applying for approval of appropriate authority to prosecute the allegations arising from the said Petitions or Complaints.

    At the conclusion of investigation, the duplicate copy of the case file is sent from TISED to the Legal Department while the SEU refers its Duplicate case files to its Legal Section for Vetting, Legal Advice and possible Prosecution. By virtue of the current organogram of the Service, all criminal prosecutions are supervised by the Legal Department which is under the Direct Reports Group in the office of the Executive Chairman.

    ii. Prosecution:

    Section 47 of the Federal Inland Revenue Act provides for the prosecution of offences by the FIRS as follows:

    The Service shall have powers to employ its own Legal officers which shall have powers to prosecute any of the offences under this act subject to the powers of the Attorney-General of the Federation.

    Where the Legal Department arrives at a conclusion that investigation is conclusive and offences are disclosed by the investigation and the proof of evidence, then Counsel reviewing the case subject to the approval of the Executive Chairman, prepares and prefers charges against the named Accused persons before the Federal High Court of Nigeria.

    Note that by virtue of Section 33(2) of the Federal High Court Act Cap F12, Laws of the Federation of Nigeria 2004 (As Amended) Criminal trials before the Federal High Court are Summary in nature as opposed to a Full trial before the State High Courts or the High Court of the Federal Capital Territory as the case may be. The prosecution is also required to comply with the Federal High Court (Criminal Procedure) Practice Directory 2013 to engage the case in full throttle and minimize unnecessary preliminary objections from the Defence.

    By a letter of application to the Registrar pursuant to Section 47 of FIRS Act, a Charge is filed along with the Proof of Evidence and the list of Prosecution Witnesses. Every filing done by the FIRS is official and need not be accessed or paid for at the Registry of the Federal High Court. For case of service, the Prosecution also prepares another letter applying to the Registrar to allow it serve the Charge on the named Accused persons who are usually in contact with the Investigation Police Officer (IPO). It is best practice to do an internal memo to the SEU notifying the IPO of the date of arraignment in order to facilitate the appearance of the Accused persons through their Sureties before the court.

    iii. Arraignment of accused persons and preliminaries of bail pending trial:

    Arraignment and Plea of persons standing Criminal Trial is for provided under Section 215 of the Criminal Procedure Act Cap C41, Laws of the Federation of Nigeria. On a date fixed by the court, the Charge is read to the Accused person(s) and they are asked by the Court to take their plea-Guilty or not Guilty. However there are exceptions to this rule where an Incorporated Company is involved.

    Where the Accused persons plead guilty to the Charge, the Prosecution reviews the facts of the case, tenders CTCs of relevant documents in support of the facts as Exhibits and applies for a Conviction. The Court will thereafter consider the facts and Exhibits tendered and give Judgments; Convicting the Accused Persons and sentence with appropriate punishments ranging from fines or imprisonment or both.

    Where however as in most cases the Accused persons pleads “not guilty” to the Charge, the Prosecution applies for a date for trial to prove the case against the Accused person(s).

    At this point the Accused person(s) through their Counsel applies for bail of the Accused persons pending trial. It is always good practice for the Prosecution to insist that all applications for Bail pending trial be brought formally. This would afford the Court the opportunity to hear the Bail application on the merits of the Affidavit evidence filed by the parties. But note that once a person has been properly arraigned before the Court, the Accused Persons shall be remanded in prison custody pending the Hearing of the application for Bail. However, in exceptional cases where the Charge was served late on the Accused person(s), the Courts have been minded to consider Oral Applications for Bail. In such circumstance, the Court restricts Counsel to Oral arguments on points of Law.

    iv. Laws relevant in criminal proceedings:

    Criminal trials before the Federal High Court of Nigeria is regulated by four major legislations; Constitution of the Federal Republic of Nigeria 1999 (As Amended), the Evidence Act Cap E14, Laws of the Federation of Nigeria 2004 (As Amended), the Criminal Procedure Act Cap C41 Laws of the Federation 2004 (As Amended) and the Federal High Court Act Cap F12, Laws of the Federation of Nigeria 2004 (As Amended).

    There is in addition the Federal High Court (Criminal Procedure) Practice Directory 2013 which creates responsibilities for the Prosecution and the Defence.

    Note that Section 34 of the Federal High Court Act provides that the Court shall give priority to Revenue causes and matters. A community reading of FHC Act, the EFCC Act and the FIRS Act reveals that Revenue matters have been placed in Accelerated Hearing by these statutes and Prosecuting Counsel must be alert in drawing the Courts attention to relevant Sections of these Laws in course of Trial.

    v. Order of trial:

    a. prosecution witnesses:

    These are persons; the Complainant- Federal Republic of Nigeria- intends to call to give evidence as Prosecution witnesses in proof of the Charge before the FHC in a Criminal trial. These must be persons who are very conversant with the facts of the case particularly the areas they are to testify. It is good practice for the Prosecuting Counsel to have pre-trial meetings with the intended witnesses and prepare them properly for trial.

    On a named date for Trial, the Counsel for the Prosecution calls his witnesses to lead evidence in order to prove the various counts on the Charge against the Accused person(s). This process is called Examination-in-Chief.

    At the end of the Examination–in-Chief of each Prosecution witness, the Court inquiries from the Defence Counsel whether he has any questions for the Prosecution Witness who has testified. If the Defence Counsel does, he will engage the witness in a process of Cross-Examination. There is no limit to questions asked by way of Cross-Examination. The sky is the limit.

    Where the Cross-Examination brings out issues that are nebulous or ambiguous in Evidence, the Court will allow Counsel for the Prosecution to Re-Examine the Witness and/or thereafter start the entire process all over with another witness until all the Prosecution Witnesses are taken.

    Note that there is no limit as to the number of witnesses for the Prosecution, but it is good practice to include all material witnesses.

    b. Defence witnesses

    At the close of the case for the Prosecution, the Court shall call upon the Defence Counsel to commence the defence of the Accused persons. However, the Defence Counsel has one of several options; He may take a date to address the Court on a No Case Submission that the Accused person(s) have a no case to answer; urging the Court to discharge him/her.

    Note that if the Defence Counsel makes a ‘No Case’ Submission and relies on it, the decision of the court shall be a judgment on the merit. If the no case submission fails and Defence Counsel does not rely on it, the Court will ask the defence to call its witnesses. The procedure for call of Defence witnesses is similar to the procedure of calling Prosecution witnesses as discussed above.

    vi. Addresses, conviction and sentence

    At the close of the case for the Defence, the Court may order written addresses or take addresses of Counsel viva voce (Orally).

    The Defence addresses the Court first and the Prosecution replies. If issues are raised in the Prosecution’s reply that can be resolved legally, the Defence rejoins on issues of Law only. The sequence is followed even when the Court orders the address/reply/rejoinder to be written.

    On a named date, the Court shall call upon Counsel to address it orally or to adopt their written submissions as the case maybe. The Court shall thereafter take a date for Judgment and Sentence. On a named date the Court delivers its Judgment for or against the Prosecution. Where the Judgment is against the Accused person (Conviction), he/she shall be sentenced subject to the discretion of the Court which must be exercised judicially and judiciously.

    There is no gainsaying the fact that either party to the litigation process (Civil and Criminal Litigation) has a Right of Appeal under the Constitution over decisions and Judgments of the Federal High Court of Nigeria. Appeals lie from the Federal High Court to the Court of Appeal and from the Court of Appeal to the Supreme Court of Nigeria.

    1. Suggestions on the way foward in raising the

    standards of tax enforcement in Nigeria

    •The gamut of Nigerian corpus juris (on Tax Laws) is very much in place in terms of their content and enforcement procedures. See all the Tax laws listed on the First Schedule to the FIRSA 2007; in addition to the various States and Local Government Laws on Tax Administration which draw their strengths as existing laws by virtue of Section 315 of the 1999 Constitution (As Amended).

    •Emphasis should now be shifted to enforcement of these tax laws; rather than engaging in discuss on further tax legislation.

    •All Stakeholders in Taxation: including but not limited to the Tax payer, the Tax Revenue authorities, the various organs of Government especially the Federal Ministry of Finance and the Judiciary should be alert in their responsibilities under these laws; ensuring that the various Tax laws are given their proper interpretation and effects in the course of enforcement. For instance Section 24 of FIRSA 2007 is rarely utilized by the Accountant – General of the Federation to deduct at source taxes owed from budgetary allocations of government MDAs.

    •Tax Revenue Authorities should be more proactive in triggering in administrative tax enforcement processes (Power of Substitution provided by Section 31 of FIRESA; Distrain, deduction at source by the Federal Ministry of Finance and the use of other Agencies of government such as the Police, SSS, Customs and Immigration, CBN to mention but a few) in the enforcement of the various tax laws. See Section 36 of FIRSA 2007.

    •The Judiciary should be equally proactive in handling tax enforcement processes brought before it; Judicial officers are urged to view cases of tax evasion more seriously and give them their pride of place as financial crimes defined in Section 46 of the EFCC Act 2004 and not shy away from the global best practice of placing such cases on Accelerated Hearing within the context of Section 19 of EFCC Act 2004 (As Amended)

    NB. Most countries without oil resources depend on tax revenue for economic development and their strong tax regimes are strengthened and supported by their courts.

    •Tax Revenue Authorities to increasingly utilize Mutual Legal Assistance by liaising with other countries in taxation agreement with Nigeria; so as to bring to justice the absconding tax defaulters. As a corollary to the above, courts are urged to welcome and expedite action in handling cases involving Interim forfeiture applications on taxation cases brought before them.

    •Tax authorities to enhance taxpayers’ education so as to engender Self-Assessment and encourage Voluntary Compliance on the part of the tax payer.

    NB: studies have shown that should every taxable person pay little tax voluntarily, the gross revenue yield would certainly increase.

    •Stakeholders to ensure that the taxation chain is not broken. Tax revenue flow should be tied up to the budgetary performance and economic development indices. In other words the taxpayer should be able to see and access the extent of budgetary performance vis-a-vis the percentage of tax collected.

    •Tax authorities to utilize, protect sourced information and enforce reward regimes for the Whistle Blowers so as to encourage them in volunteering information/leads on potential cases of tax evasion.

    •Tax authorities to avoid the abuse of Section 30A of CITA as it concerns the use of Best of Judgment or Turnover Assessments that are unfair, arbitrary and unreasonable; so as to maintain the integrity of the tax system. This case was adopted with approval in the case of I. D. SAM NIG. LTD. Vs Lagos State Internal Revenue Service where the court held that on discovery of new facts or issues, the use of Additional Assessments should be done with utmost caution and exactitude.

    NB: Additional Assessments based on BOJ are common to tax authorities across the world; indeed they are provided for by statutes. See Section 28 of Australian Income Tax Act 1922 and Section 80 of English Taxes Management Act 1970; are both pari materia with Section 30A of CITA. Lord Denning M.R, while interpreting the English Income Tax Act in the case of PARKINS Vs CATTELL had this to say: The word “discover” simply means ‘find out…. An Inspector of Taxes “discovers” (that income has not been assessed when it ought to have been) not only when he finds out new facts which were not known to him or his predecessor, drew a wrong inference from the facts which were then known to him, and further, when he finds out that he or his predecessor got the law wrong and did not assess the income when it ought to have been” (page 204).

    It is noteworthy that in either of these instances, the Tax Authorities are admonished to be fair, just and reasonable in making Additional Assessments based on Best of Judgment (BOJ); so as to maintain the integrity of the tax system.

    2. Conclusion:

    Tax Enforcement (Investigation, Civil and Criminal Litigations) remains a desideratum and indeed inevitable in an effort to administer all the Tax Laws in Nigeria. Investigations must be through and certain on all the elements of the offences and the sums alleged to be owed by the person under investigation. Recourse to Civil and Criminal Litigations should be made when the Service has exhausted all the Statutory and Procedural requirements involved in Tax Administration. It is important to note that an investigator and/or Law Officer entrusted with the official duty to investigate/prosecute must do so diligently and put in place all relevant evidence that would assist the Court to exercise its discretion one way or the other. Tax Enforcement has the effect of punishing offenders and acting as deterrence for other members of the public while engendering voluntary compliance to the Tax Laws. In all of these, stakeholders including but not limited to the Tax Revenue Authorities, the Tax payer and the Courts should exercise their various responsibilities diligently and conscientiously. The processes may be tedious but the prospects of their attainment are excellent.