T he need for the federal government to shore up its non-oil revenue has never been more pressing than now that the country’s debt burden is rising. Increasing non-oil revenue puts more focus on the tax base of the country.
According to the World Bank tapping into the low-hanging and revenue-yielding fruits of tax would go a long way in raking in substantial gains for the Nigerian government as the country will then be able to grow its tax-to-GDP ratio to about seven per cent and rake in about N10 trillion revenue in the next three years.
However, tax collection has been challenging in the country as roughly 22 per cent of Nigerians believe that there is nothing wrong with tax evasion and 50 per cent of small businesses believe that while tax evasion is wrong it is understandable.
The importance of taxation cannot be overemphasized as it not only pays for public goods and services, but also serves as a key ingredient in the social contract between citizens and the economy. According to the World Bank, with oil prices being affected by the COVID-19 pandemic, there is the urgent need to increase non-oil revenue in Nigeria.
“This calls for a carefully calibrated set of policy and administrative measures that can grow revenues without discouraging investment. That rules out any increases in traditional ad valorem taxes like the value-added tax but it does afford an opportunity to fully apply tax policies already adopted and reform tax administration to seal compliance gaps.
“In the longer term, fundamental reforms of the tax system will be necessary to stimulate post-pandemic investment and economic growth. As Nigeria tries to ‘build back better’ after the COVID crisis, a more strategic approach to revenue mobilisation will also be necessary: not just taxing more, but taxing better; not just how much to collect, but how to collect, what to collect, and from whom,” the World Bank had stated.
But while the government strives to secure enough resources to meet its social and economic contracts with the people, the policy of equity, justice, fairness and due process should be followed in order to not kill businesses that generate tax revenue.
This had been one of the considerations in the approval for the Tax Appeal Tribunal (TAT) (Procedure) Rules, 2021 in June this year by the minister of finance, budget and national planning, Mrs Zainab Shamsuna Ahmed, pursuant to her powers under Section 61 of the Federal Inland Revenue Service (Establishment) Act, 2007 (as amended).
The rules, which replaced the defunct TAT (Procedure) Rules, 2010, enables the Tribunal to deal justly, fairly and expeditiously with appeals and encourages and promotes the settlement of disputes among parties.
Other sections of the rule require taxpayers to pay 50 per cent of any disputed amount into a designated account of the TAT as security for prosecuting an appeal, prior to commencement of appeals.
It also involves modification of some old definitions, and interpretation of additional terms such as “appeal”, “notice of appeal”, “decision of the Tribunal” etc; recognition of service of documents or processes carried out by email or such other electronic means as the Tribunal may permit; and recognition of virtual/ remote hearing of applications and delivery of rulings by the Tribunal.
It also included introduction of a six-month time frame from the date of commencement of trial for the TAT to conclude and provide a decision; and provisions for hearing of ex-parte and non-contentious applications in Chambers as well as summary appeal procedure for liquidated money demands.
Although the TAT (Procedure) Rules, 2010 is effectively replaced, the Rules allow for “anything done” under the defunct 2010 Rules to remain valid, as long as such is not inconsistent with the provisions of the new Rules, thereby grandfathering existing matters and ensuring a smooth transition.
Commenting on the move by the fiscal authority, analysts are of the opinion that the amendments to the TAT Rules, which is the initial forum for formal tax adjudication in Nigeria, align with changes in global tax administration systems and would ensure that the TAT’s procedures are up to date and give taxpayers increased confidence in the system.
According to partner and head, Tax Regulatory and People, KPMG, Wole Obayomi, the implementation of the new rules emphasises the federal government’s commitment to improving Nigeria’s tax landscape, which commenced with the enactment of Finance Acts, 2019 and 2020.
According to him, the amendments to the TAT (Procedure) Rules, which is the initial forum for formal tax adjudication in Nigeria, align with changes in global tax administration systems and would ensure that the TAT’s procedures are up to date and give taxpayers increased confidence in the system.
The role of the Tax Commissioners are not those of “judges” in the constitutional sense and so, rather than becoming a part of the judiciary, the TAT should be preparatory to, and supplementary to the formal judicial system. Therefore, the changes may revive the challenges on the legality of the TAT and its encroachment on the constitutional preserve of the Federal High Court on revenue and taxation issues.
On their part, analysts at PwC noted that: “The new procedures took effect from 10 June 2021, but taxpayers generally became aware of it end of September 2021. The Rules are intended to make the TAT more efficient in the dispensation of justice.
“They are also a reflection of the current realities given the wide adoption of technology in the administration of justice. With the powers to order costs, the TAT now has powers to penalise erring parties for unprofessionalism and unnecessary delays.”
In all it is hoped that with the amendment, tax litigations are speedily attended thus prompting a strengthened trust in the tax collection agency towards growing the tax revenue of the country in a future without oil.