FIRS aims to conclude ongoing tax audits using NORA

  • Post category:Business / Tax

The Federal Inland Revenue Service (FIRS) has started issuing Notice of Refusal to Amend (“NORA” or “the notice”) to companies with open tax audit exercises. Companies affected by the notice include;

  • taxpayers that have previously objected to FIRS demand notice and 
  • taxpayers that have resolved some queries during tax reconciliation meetings.

FIRS expects these companies to pay the tax liabilities within 30 days of receiving the notice. This call-to-action is irrespective of deliberations during reconciliation meeting. Where these amounts are still unpaid after 30 days, FIRS may use enforcement actions to recover the tax liabilities.

Section 69(5) of the Companies Income Tax Act (CITA) empowers FIRS to issue a notice of refusal to amend an assessment if there is a tax dispute between the taxpayer and FIRS. However, this differs from FIRS’ choice of issuing a NORA only on the notion that tax issues remain unresolved for 6 months even if there have been tax reconciliation meetings. Neither CITA nor any other applicable law in Nigeria grants FIRS the powers to issue a NORA based on the length of time in reconciliation.

FIRS has shunned the monetary and non-monetary resources used in clearing ongoing tax issues. This may leave an aggrieved taxpayer to choose the route of the Tax Appeal Tribunal (TAT). An aggrieved taxpayer may appeal to TAT within 30 days of receiving a NORA. More so, TAT may grant an extension of time if the reason is adequate.  Apparently, the notice will increase the cost of tax compliance and also impede the ease of doing business in Nigeria. As the Nigerian government seeks to make the economy a more conducive place to do business, its tax authorities should also pursue tax-friendly policies. Tax authorities in Nigeria should promote voluntary tax compliance. To this end, FIRS should give taxpayers extra time to conclude tax audit or dispute. Where FIRS intends to continue with a NORA, the emphasis should dwell on unsettled tax issues. Taxpayers with pending tax audit exercises are encouraged to reconcile their tax positions with FIRS so as to avoid unfavorable action of FIRS.
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