Abstract
It is the requirement of law that tax is paid. Therefore, the discharge of tax obligation in Nigeria is not by choice. In the process of the tax authorities who are authorized under the law to collect taxes from tax payers, disputes arise. The paper reveals that in its bid to lessen the incidents of tax evasion in Nigeria, the Federal Government carried out a major reform in its tax regime. Thus, the Tax Appeal Tribunal (TAT) was established to ensure fairness and transparency of the tax system through a quick and efficient method of dispensing justice. Appeal from there lies to the Federal High Court on point of law. However, there is the unresolved problem of the constitutionality of TAT in its powers and jurisdiction in resolving tax disputes with Federal High Court (FHC). Furthermore, the paper reveals that tax disputes are not arbitrable under Nigerian law. It is the argument of this paper that although the courts are recognized as the most visible dispute arbiter, it is not always the most effective or efficient method. Therefore, it is further the argument of this paper that Nigeria’s tax objection procedures as governed by statutory rules should incorporate Alternative Dispute Resolution mechanism as practiced in other jurisdictions. The paper recommends that the necessary amendments should be made to enable TAT and FHC at their levels to encourage the use of early dispute resolution (EDR) and alternative dispute resolution (ADR), particularly mediation in the settlement of tax disputes brought before them. The introduction of VAIDS (Voluntary Assets and Income Declaration Scheme) by the Federal Government of Nigeria is in line with global best practices on non-disclosure of informal and declaration of assets. The paper concludes among others that Nigeria, as a country cannot operate in isolation, hence the introduction of ADR in its tax dispute resolution processes should be imminent and mandatory.
Highlights
It is the requirement of law that tax is paid
Disputes between the Federal Inland Revenue Services (FIRS) and tax payers arise when tax payers fail to agree with an FIRS finding, refuses to file tax returns, or refuses to comply with its request for information
Due to the fact that tax disputes are not arbitrable in Nigeria, the paper advocates that other types of alternative dispute resolution (ADR), i.e. mediation and negotiation should be resorted more in resolving its tax disputes
Summary
It is the requirement of law that tax is paid. the discharge of tax obligation in Nigeria is not by choice. Tax dispute arises when there is disagreement between taxpayers and tax authorities, such as the Federal Inland Revenue Service (the FIRS) or a State Board of Internal Revenue, over tax liability or otherwise of a taxpayer The context of this dispute may relate to an inquiry into a return, an audit, or pre-return which could be founded on pre-or post transaction basis. The Nigerian general court system such as the Federal High Court (FHC), or even the State High Court, in cases where they may exercise jurisdiction, do not have specialized tax chambers of the courts for the purpose of handling tax disputes.2 This is in line with the prevailing global trend which many developed countries use in resolving tax disputes. The paper canvasses for the adoption of ADR for effective and quicker resolution of tax disputes and according to Odinkonigbo4, “this will help in appreciate if Nigeria is keeping with global trend, despite our peculiarities and differences, which must be considered by our local tax authorities.” It is to highlight the introduction of the innovative Executive Order signed by the Acting President of Nigeria in bringing into ‘birth’ VAIDS
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