BDO Transfer Pricing News

Nigeria - Court nullifies country-by-country reporting regulations

Nigeria’s Tax Appeal Tribunal (TAT) sitting in Lagos has nullified the country-by-country (CbC) reporting regulations that had been issued by the Federal Inland Revenue Service (FIRS) and published in Official Gazette No. 2 of 8 January 2018.

The nullification of the regulations was in the judgement delivered by the TAT on 17 August 2023 on an appeal filed by Checkpoint Software Technologies B.V. Nigeria Limited (CST) against the FIRS.  CST challenged the administrative assessments imposed by FIRS for the late filing of its 2019 and 2020 CbC return.

CST argued that the regulations issued by the FIRS were not approved by a legally constituted board of the FIRS as required by the Federal Inland Revenue Service Establishment Act 2007 (FIRSEA).  Another ground for the appeal was that the regulations were based on the Country-by-Country Multilateral Competent Agreement signed by Nigeria, which has not been ratified by the National Assembly in accordance with Section 12 of the Constitution of the Federal Republic of Nigeria.

In delivering its judgment, the TAT upheld the CST’s grounds of appeal, nullified the regulations, and declared the notices of administrative assessments issued by the FIRS null and void. The tribunal directed the FIRS to issue replacement administrative assessments for the late filing of the CbC return in compliance with the relevant provisions of the FIRSEA. The penalties specified in the nullified regulations were significantly higher than other penalties in the tax laws.
At the time of this writing, the FIRS had not appealed the judgement.

The nullification of the regulations notwithstanding, taxpayers should be aware that the FIRS may request full information regarding the taxation of an individual or company, including information on related-party transactions, which must be provided within 30 days from the date the request is made in accordance with the provision in the FIRSEA. Failure to comply with the request would subject the taxpayer to a penalty of NGN 25,000 in the first month of default and NGN 10,000 for each subsequent month the failure continues.

Kamar Salami
BDO in Nigeria