50% of Disputed Tax Amount to be Paid into Court Account – New Practice Direction [Download]


Anyone who intends to challenge a tax assessment in court must pay 50 per cent of the amount in dispute into an interest-yielding account of the Federal High Court before the case can be heard.

The new requirement is contained in a recent practice direction issued by the Chief Judge, Justice John Tsoho, under Order 57, Rule 3 of the Federal High Court (Civil Procedure) Rules, 2019.

Federal Inland Revenue Service (FIRS) Executive Chairman, Mr Muhammad Nami, highlighted the condition at a public hearing organised by the House of Representatives Committee on Public Accounts.

The committee is investigating revenue leakages from tax waivers and incentives to foreign companies granted pioneer status.

Nami, in a statement yesterday, stated that the Practice Direction took effect from May 31.

He said the FIRS management “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”.

“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,” he said.

These amendments, he said, are aimed at checking the activities of taxpayers currently taking advantage of some gaps in the laws and fiscal policy by establishing businesses in the tax-free zones.

Nami said: “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”.

He urged the National Assembly to amend the relevant tax laws “that would make it almost impossible for these companies to exploit loopholes in our tax laws to shift both profits and taxes to their countries of origin”.

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Practice Direction

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