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14 March 2019



The Federal Government of Nigeria (FGN) has revamped its commitment towards improving the rate of tax collection. This commitment has been shown in the Federal Inland Revenue Service’s (“FIRS”) relentless revenue drive through various mechanisms such as the Voluntary Assets and Income Declaration Scheme (VAIDS), grant of waivers on interests and penalties to defaulting taxpayers and increased collaboration with regulatory agencies like the Corporate Affairs Commission and the Central Bank of Nigeria.

In line with these efforts, the FIRS recently issued a notice addressed to all commercial banks in Nigeria (the “Notice”) appointing them as tax collecting agents (“Collecting Agents”) for some 2933 companies which, according to the FIRS, are in default of their tax obligations. Relying on the provisions of the Federal Inland Revenue Service (Establishment) Act[1] (“FIRS Act”) and the Companies Income Tax Act[2] (“CITA”), the Notice purports to authorise all Collecting Agents to deduct and remit to the FIRS the alleged tax debt from the taxpayers’ accounts domiciled with the Collecting Agents, deliver the bank statements and records of the taxpayers and its principal officers, and prevent the taxpayers from conducting any transactions on those accounts until the tax liabilities have been settled (together, the “Directives”).

The Notice and the attendant Directives raise a number of questions which are discussed below, the principal of which is whether the FIRS has the authority to issue the Notice in the first place. Also, whether the Notices infringe the taxpayers’ rights given that same were issued solely to the banks and whether the banks (Collecting Agents) are required to comply with the Notices? Finally, what recourse is available to the taxpayers especially those whose alleged tax liabilities have been disputed?

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