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The Nigerian Tax Laws

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Nigerian Taxation

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Objectives

After studying this chapter, readers are expected to:

  1. i.

    be abreast with different tax laws in Nigeria, and

  2. ii.

    be exposed to the sources of Nigerian Tax Law.

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Notes

  1. 1.

    For all the categories of people whom this tax is to be collected from or levied upon see sections 2 (1) (1A) (a) (b) ii, iii, iv, (2), (3) (a) (b) 4 (c) 5 and 6 Personal Income, Tax Act, CAP, p. 8 Laws of the Federation of Nigeria 2004. See also, Seyi Ojo Fundamental Principles of Nigeria Tax (Evidenced in 267 Questions and Suggested Solutions) (2nd edn, Sagriba Tax Publication, Lagos, 2003), p. 335.

  2. 2.

    Imposition of tax on individual is in Sections 2 and 3 (a) (b) of PITA.

  3. 3.

    Imposition of tax on communities is provided in Section 4 (a) (b) (c) of PITA.

  4. 4.

    Imposition of tax on families is in Section 5 of PITA.

  5. 5.

    Imposition of tax on trustee is enshrined in Section 6 of PITA.

  6. 6.

    Such amendments includes the Finance (Miscellaneous Taxation Provision) Decree No 3 of 1993, No 30 of 1996, No 32 of 1996, No 18, 19 and 21 of 1999.

  7. 7.

    See Section 2 (1) PITA.

  8. 8.

    CAP C21 Laws of the Federation of Nigeria, 2004 (As Amended).

  9. 9.

    A profit that “accruing” is a profit that matures in Nigeria. The complete accumulation of the transaction in which the profit comes in occurred on the Nigerian soil.

  10. 10.

    When profit is said to be “derived from”, the implication is that such transaction materialised on the continent of Nigeria.

  11. 11.

    In the profit that is “brought into” the country, such business may be executed outside the country, but the revenue and profit is brought into the country.

  12. 12.

    Profit “received” is a profit from a business where the derivation of profit is done in Nigeria.

  13. 13.

    For the way and manner the status of each profit is determined, see Section 13 Companies Income Tax Act.

  14. 14.

    Petroleum Profit Tax Act CAP p13 Laws of federation of Nigeria 2004 is the Act that impose tax upon profits from the winning of petroleum in Nigeria, it also provides for the assessment and collection thereof and for purposes connected therewith.

  15. 15.

    CAP 49 Laws of the Federation on Nigerian 2004.

  16. 16.

    Export duty is the 25th items listed on the Exclusive Legislative List.

  17. 17.

    This is the definition of Excise Duty in Excise Ordinance No 64 of 1941.

  18. 18.

    Hornby A.S . Oxford Advanced Learner’s Dictionary of Current English (Oxford University Press, 2000), p. 401.

  19. 19.

    Paul Minn , Black’s Law Dictionary (7th edn. West Group, St. Paul Minn, 1999), p. 585.

  20. 20.

    Lekan S. and Sunday O. op. cit. (n. 48).

  21. 21.

    CAP. C1 Laws of the Federation of Nigeria 2004.

  22. 22.

    See the introductory part of the CGTA.

  23. 23.

    Section 3 (a) (b) (c) CGTA, 2004.

  24. 24.

    Section 2 (1) (2) (3) CGTA, 2004.

  25. 25.

    CAP VI Laws of Federation of Nigeria , 2004.

  26. 26.

    Section 2 VAT Act, 2004.

  27. 27.

    Going by Section 3 of the VAT Act, 2004, items like medical and pharmaceutical products, basic food items, books and educational materials, baby products, medical services and all exported services, etc. are VAT exempted. Furthermore, since the Act empowers the minister of finance to amend, vary and modify the exempted list of items through an Order publish in the Gazette, the Federal Executive Council (FEC) in pursuant to that power in 2018 approved the VATA (Modification) Order and sent same to the National Assembly for Inclusion in the VATA Amended Bill. By the modification, the following items are now VAT exempt: Rent/lease of residential properties, public transport services, life insurance policy, services rendered by unit of microfinance bank and mortgage institutions, education and training conducted by public or non-profit educational institutions in Nigeria.

  28. 28.

    Section 4 VAT Act, 2004.

  29. 29.

    Section 5(1)(a)(b)(2)(3)VAT Act, 2004

  30. 30.

    Section 6(a)(b)VAT Act, 2004.

  31. 31.

    See Ola C.S. op. cit. (n. 6).

  32. 32.

    Later SDA Act CAP 411 LFN 1990 and now, SDA Act, CAP S8, LFN 2004.

  33. 33.

    This position is not static because the court in Dent v. Moore (1919), CLR 316 at 324 held that an instrument which is not properly stamped is nevertheless effective.

  34. 34.

    Abdulrazaq M.T “Stamp Duties” in Abdulrazaq M.T (ed.) CITN Nigerian Tax Guide and Statutes (1st edn. The Chartered Institute of Taxation of Nigeria, 2002), p. 568.

  35. 35.

    Stamp Duties Act.

  36. 36.

    Section 4 (1)SDA CAP S8 LFN 2004.

  37. 37.

    Section 4 (2)SDA CAP S8 LFN 2004.

  38. 38.

    Abdulrazaq op. cit., (n. 96), p. 569.

  39. 39.

    James M. Henderson, Richard E. Quandt Microeconomic Theory: A Mathematical Approach (3rd edn. International Student Edition, Tata Mc Graw Hill Education Private Limited New Delhi, 2003), p. 152.

  40. 40.

    See the case of AG v. Camplough (1878)3 ex 214.

  41. 41.

    Withdrawal of money through Automated Teller Machine (ATM) now attracts N50.00 stamp duties charges on each N1,000,00 k withdrawn.

  42. 42.

    See Section 23 (3) (c) SDA, see also Lekan S. and Sunday O et al. op. cit., (n. 48) 641–642.

  43. 43.

    Lekan S. and Sunday O et al. (n. 48), ibid.

  44. 44.

    Ola C.S op. cit., (n. 6).

  45. 45.

    Ibid.

  46. 46.

    (1919)CLR 316 at 324.

  47. 47.

    Abdulrazaq M.T. op. cit., (n. 96), p. 578 According to Section 22(4) Stamp Duties Act an instrument which is not duly stamped in accordance with the law in force at the time when it was first executed “shall not except in criminal proceedings, be tendered in evidence or be available for any purpose whatsoever”. In other words, the prohibition on admissibility according to the court in Mason v. Motor Traction Co (1905) 1 Ch 419, does not extend to criminal proceedings, or apparently to rent tribunals, since these are not court of law. Though failure to stamp an instrument is not a criminal offence but SDA provides penalties for late stamping. On penalties for late stamping, the general rule as stated in SDA S.23 (1) is that the person presenting the instrument for stamping after the date of execution must pay the unpaid duty. Penalty of #20 and a further penalty, if the unpaid duty exceeds #20 of interest on such duty at 10% per annum from the day upon which the instrument was first executed up to the time when such interest is equal in amount to the unpaid duty. Not only that, going by sec 25 SDA, if any person whose office is to enroll register or enter in, or enters any such instrument not being duly stamped, he shall on conviction incur a fine of N20.00 k. The court further held in Mason v. Motor Traction Co (supra) that in the Act, a fine of #40 is chargeable if a person executes an instrument in which partial facts affecting the liability to or amount of duty were not disclosed especially if it was with an intention to defraud the state.

  48. 48.

    See the Nigerian National Tax Policy Document.

  49. 49.

    Abdulrazaq M.T, op. cit. (n. 45), p. 568.

  50. 50.

    Olokooba S.M and Sola Animashaun “Abuse of Rights Doctrine: A Contending But Not Contentious Doctrine in the Cotemporary Nigerian Tax Jurisprudence” BIU Law Journal Vol. 2 (1) 2015, p. 63. See also Orojo J.O Company Tax Law in Nigeria (Sweet and Maxwell, 1979), p. 1.

  51. 51.

    Peter G. Whiteman and David C. Milne Whiteman and Wheatcroft on Income Tax (2nd edn. London Sweet and Maxwell, 1976), p. 27.

  52. 52.

    The general rules of legal construction are:

    Literal Rule of Interpretation ; This rule was used by the court in the tax case of Alhaji Ibrahim and Alhaji Aliyu Ahmadu v. Governor of Kogi State (1960–2010)1, NTLR. Cape Brandy Syndicate v. IRC (1921)7 2 KB 403. Aderawos Timber Trading Co Ltd v FBIR (1966)LLR 195. Mapp v. Oram (1968)3 ALL ER 1. Generally on literal Rule of Interpretation, see, R v. Bangaza (1960)5 F.S.C. 1 Golden Rule of Interpretation ; which enjoins the court to go beyond the ordinary meaning of the words of the statute to ascertain the legislative intent as was done in Akinosho v. Enigbokan (1955)21 NLR 88 as well as avoidance of absurdity in the statute; Council of University of Ibadan v. Adamolekun (1967)1 ALL NLR 213. This rule was formulated in the case of Beck v. Smith (1836)2 M&W 191. Mischief Rule of Interpretation This rule aims at achieving the general policy of the statute by suppressing the evil the statute intended to avoid. See Heydon’s case(1584)3 Co Rep 7, see also, Mayfair Property Co (1898) 2 Ch. 28 at 35. Commissioner of Customs and Excise v. H.G. Kewly Ltd (1965)1WLR 786, Scottish Shire, Line Ltd v. Lethem (Surveyor of Taxes) (1912)6 Tax Cases 91 at 99. Generally on principles of construction, see, Stephen W. Mayson, Mayson on Revenue Law , (1988–89 edn. Blackstone Press Ltd. London, 1980), p. 5.

  53. 53.

    Adedokun K.A Enforcement and Recovery of Income Tax in Nigeria , (Corporate Transactions Limited, 2010), p. 10, see also Olokooba S.M, K.A Kareem and L.K Zakariya “Ambiguities in the Nigerian Tax Laws”, 2014 3, (1), Ife Juries Review , p. 725 see also, Styles v. Middle Temple Treasurer (1899), Vol. 68 QB, p. 157. See Coltness Iron Company v. Black (1881), 6.A.C 315, Halliburton West Africa Ltd v. Federal Board of Inland Revenue (1960–2010) 1NTLR 82–108.

  54. 54.

    Pryce v. Monmoutshire Canal and Railway Companies (1879) 4 AC 197, Okupe v. FBIR (1974) 4 SC 93.

  55. 55.

    Abdulrazaq op. cit. (n. 45), p. 24. Another example of Revenue Practice book is Tax Information Circulars which used to be published by Federal Inland Revenue Services. Tax Information Circular in Osadebay v. A.G (Bendel) (1991)1 NWLR (pt 169)525 at 599–600 was held to be an administrative direction; and in Suleiman v. Osideinde (1944)2 NWLR(pt 327), Ishola v. Ajigboye (1994)6 NWLR (pt 352), at 62, Olanrewaju v. Oyeyemi (2001)2NWLR(pt 696), Ekekengbo v. Fibresima (199403NWLR(pt335) 707, the courts held that administrative directions derives their validity from the principal enabling legislations. For detail discussion on the significance of Tax Information Circular on aiding reporting and compliance in taxation, see Olokooba S.M . “Tax Information Circulars: Paraphernalia of Aiding Tax Reporting and Compliance in the Nigerian Banking Sector ” Joseph Ayo Babalola Law Journal 1(1) 2014, pp. 39–47. On the Legal Status of Tax Information Circulars, see, Bimbo A “Legal Status of Tax Information Circulars”, Nigerian Tax Notes (Lagos Hybrid Consult, 2011).

  56. 56.

    Peter G. Whiteman , et al., op. cit., (n. 116), p. 33.

Relevant Authorities and References for Further Reading

Cases

  • Aderawos Timber Trading Co Ltd v FBIR (1966) LLR 195 That tax statute must be construed literally without any intendment

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  • Akinosho v. Enigbokan (1955)21 NLR 88 That Golden Rule of Interpretation enjoins the court to go beyond the ordinary meaning of the words of the statute to ascertain the legislative intent as was done in as well as avoidance of absurdity in the statute

    Google Scholar 

  • Alhaji Ibrahim and Alhaji Aliyu Ahmadu v. Governor of Kogi State (1960–2010)1, NTLR On the fact that tax statute is strictly and literarily construed without any room for intendment

    Google Scholar 

  • Beck v. Smith (1836)2 M&W 191 The case where Golden Rule of Interpretation was formulated

    Google Scholar 

  • Cape Brandy Syndicate v. IRC (1921)7 2 KB 403 That tax statute should be strictly and literarily construed

    Google Scholar 

  • Commissioner of Customs and Excise v. H.G. Kewly Ltd (1965)1WLR 786 On liberal interpretation of tax statute

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  • Coltness Iron Company v. Black (1881), 6.A.C Wherein it was held that tax language must be found in a clear language of statute and construed within such language

    Google Scholar 

  • Council of University of Ibadan v. Adamolekun (1967)1 ALL NLR 213 That Golden Rule of Interpretation enjoins the court to go beyond the ordinary meaning of the words of the statute to ascertain the legislative intent as was done in as well as avoidance of absurdity in the statute

    Google Scholar 

  • Dent v. Moore (1919) CLR 316 at 324 Where it was held that an instrument which is not properly stamped is never the less effective

    Google Scholar 

  • Ekekengbo v. Fibresima(199403NWLR(pt335) 707. The courts held that administrative directions derives their validity from the principal enabling legislations

    Google Scholar 

  • Halliburton West Africa Ltd v. Federal Board of Inland Revenue (1960–2010) 1NTLR 82–108, vol. 68 QB, p. 157. That tax statute must be construed strictly

    Google Scholar 

  • Heydon’s case(1584)3 Co Rep 7, 35 Laid down the main purpose of using Mischief Rule of Interpreting a statute

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  • Ishola v. Ajigboye(1994)6 NWLR (pt 352), at 62. The courts held that administrative directions derives their validity from the principal enabling legislations

    Google Scholar 

  • Mason v. Motor Traction Co (1905)1 Ch 419. Establishes the fact that, the prohibition on admissibility of instrument not properly stamped does not extend to criminal proceedings, nor apparently to rent tribunals, since these are not court of law

    Google Scholar 

  • Mayfair Property Co (1898) 2 Ch. 28 at 35. The main purpose of using Mischief Rule of Interpretation is at achieving the general policy of the statute by suppressing the evil the statute intended to avoid

    Google Scholar 

  • Okupe v. FBIR (1974) 4 SC 93. On the fact that tax statute is strictly and literarily construed

    Google Scholar 

  • Olanrewaju v. Oyeyemi (2001)2NWLR(pt 696). The courts held that administrative directions derives their validity from the principal enabling legislations

    Google Scholar 

  • Osadebay v. A.G (Bendel)(1991)1 NWLR (pt 169)525 at 599–600 Tax information Circulars was held to be an administrative direction

    Google Scholar 

  • Mapp v. Oram (1968)3 ALL ER. On strict literal interpretation of tax statute

    Google Scholar 

  • Pryce v. Monmoutshire Canal and Railway Companies (1879) 4 AC 197. On the fact that tax statute is strictly and literarily construed

    Google Scholar 

  • R v. Bangaza (1960)5 F.S.C. 1 That statute should be Interpreted literarily not withstanding it hardship effect on parties

    Google Scholar 

  • Scottish Shire, Line Ltd v. Lethem (Surveyor of Taxes)(1912)6 Tax Cases 91 at 99 That tax statute can be interpreted to deduce the intention of the legislature

    Google Scholar 

  • Suleiman v. Osideinde (1944)2 NWLR(pt 327). The courts held that administrative directions derives their validity from the principal enabling legislations

    Google Scholar 

  • Styles v. Middle Temple Treasurer (1899) Established the fact that tax is a product of statute and that tax language must be found in a clear language of statute

    Google Scholar 

Books

  • Abdulrazaq, M.T.: Principles and Practice of Nigerian Tax Planning & Management, 2nd edn. Stirling-Horden Publishers Ltd., Lagos (2013)

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  • Adedokun, K.A.: Enforcement and Recovery of Income Tax in Nigeria. Corporate Transaction Limited, Lagos (2010)

    Google Scholar 

  • Bimbo, A.: Legal status of tax information circulars. Nigerian Tax Notes. Lagos Hybrid Consult (2011)

    Google Scholar 

  • Hornby, A.S.: Oxford Advanced Learners Dictionary of Current English. Oxford University Press (2000)

    Google Scholar 

  • Henderson, J.M., Quandt, R.E.: Microeconomic Theory: A Mathematical Approach, 3rd edn., International Student Edition, Tata Mc Graw Hill Education Private Limited, New Delhi (2003)

    Google Scholar 

  • Lekan, S., Sunday, O.: Taxation: Principles and Practice in Nigeria. Silicon Publishing Company, Ibadan (2006)

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  • Ola, C.S.: Income Tax Law for Corporate and Unincorporated Bodies in Nigeria. Ibadan Heinemann Educational Books (1981)

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  • Olokooba, S.M.: Law of Taxation II. National Open University of Nigeria, Lagos (2010)

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  • Orojo, J.O.: Company Tax Law in Nigeria. Sweet and Maxwell (1979)

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  • Paul Minn Black’s Law Dictionary, 7th edn. West Group, St. Paul, Minn (1999)

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  • Whiteman, P.G., Milne, D.C.: Whiteman and Wheatcroft on Income Tax, 2nd edn. London Sweet and Maxwell (1976)

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  • Ojo, S.: Fundamental Principles of Nigerian Tax, (Evidenced in 269 Questions & Suggested Solutions), 2nd edn. Sagriba Tax Publication, Lagos (2003)

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  • Mayson, S.W.: Mayson on Revenue Law, 1988–89 edn. Blackstone Press Ltd., London (1980)

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Journals

  • Olokooba, S.M., Kareem, K.A., Zakariya, L.K.: Ambiguities in the Nigerian Tax Laws. Ife Juries Rev. 3(1) (2014)

    Google Scholar 

  • Olokooba, S.M., Shola Animashaun: Abuse of rights doctrine: a contending but not contentious doctrine in the cotemporary Nigerian tax Jurisprudence. BIU Law J. 2(1) (2015)

    Google Scholar 

  • Olokooba, S.M.: Tax information circulars: paraphernalia of aiding tax reporting and compliance in the Nigerian banking sector. Joseph Ayo Babalola Law J. 1(1) (2014)

    Google Scholar 

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Authors and Affiliations

  1. Department of Business Law, Faculty of Law, University of Ilorin, Ilorin, Nigeria

    Saka Muhammed Olokooba

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  1. Saka Muhammed Olokooba
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Olokooba, S.M. (2019). The Nigerian Tax Laws. In: Nigerian Taxation. Springer, Singapore. https://doi.org/10.1007/978-981-13-2607-3_3

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