Nigeria: Interest and penalties do not apply to timely contested VAT assessments (Tax Appeal Tribunal decision)
A Tax Appeal Tribunal decision concerning whether interest and penalties apply to timely contested VAT assessments
Interest and penalties do not apply to timely contested VAT assessments
The Tax Appeal Tribunal Lagos Zone held that interest and penalties do not apply to additional assessments of value added tax (VAT) that a nonresident taxpayer validly objected to within the stipulated statutory period.
The case is: MTN Nigeria Communications Plc v. Federal Inland Revenue Service
The tribunal found that the provision of software licenses and upgrades by the taxpayer who was not located in Nigeria was a taxable supply of goods or services for VAT purposes because such services were consumed in Nigeria. However, the tribunal held that the tax authority cannot impose interest and penalties on additional VAT assessments that the taxpayer objects to within the statutory period for objection. The assessment does not become final and conclusive once timely objected to by the taxpayer.
KPMG observation
It is unclear whether the Federal High Court (FHC) will uphold this judgment because it held in another case (CMA CGM Delmas v. Federal Inland Revenue Service) that objecting to a tax assessment within the stipulated period does not absolve a taxpayer from the obligation to pay interest and penalties on additional tax assessment arising from audits.
Read an November 2023 report [PDF 1 MB] prepared by the KPMG member firm in Nigeria
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