Tax defaulters to pay 50% of disputed amount into court account

Tax defaulters who plan to institute legal cases against the Federal Inland Revenue Service (FIRS) now have to pay 50% of the assessed amount in dispute into an interest-yielding account of the Federal High Court before the court can hear such matters.

Executive Chairman, FIRS, Mr Muhammad Nami, disclosed this during a public hearing organised by the House of Representatives Committee on Public Accounts investigating revenue leakages arising from tax waivers and incentives to foreign companies granted pioneer status.

According to Mr Nami, the new rule is contained in a recent Practice Direction issued by the Chief Judge of the Federal High Court, Abuja, Hon. Justice John Terhemba Tsoho, under Order 57 rule 3 of the Federal High Court (Civil Procedure) Rules, 2019. He also confirmed that the Practice Direction took effect from 31 May 2021.

Mr Nami also stated that the Management of FIRS “has initiated a process for a Memorandum of Understanding (MoU) with critical stakeholders as far as information sharing and amendments to the relevant laws are concerned”.

He revealed further: “We have gotten several amendments to our tax laws which require companies operating in the Free Trade Zones to file tax returns on their operations to the FIRS. These amendments are aimed at checking the activities of taxpayers currently taking advantage of some gaps in our tax laws and fiscal policy by establishing businesses in the nation’s tax-free zones.”

He emphasized that “such companies produce goods that are meant for export and then sell the goods to our custom’s zone thereby making it impossible for the companies operating in our custom’s zone to operate competitively with them.”