Legal Nigeria

Andersen: New tax rule may increase unemployment, says



The Tax Appeal Tribunal (Procedure) Rules may increase unemployment, Andersen, a leading tax management company, has said.

The company made this known on its website. The piece co-authored by Samuel Ibrahim and Ibiloluwa Akintoye, was entitled: “Tax Dispute Resolution in Nigeria: Reinforcing Fairness in Process, Procedure, Form and Substance.”

The article warned the Order 3 Rule 6 in the new rules could cause cash flow problems for businesses, bring about collapse of such and those in the chain in which such businesses operate.

The new provision makes it mandatory for a taxpayer disputing a tax assessment to make a security deposit of 50 per cent of the tax liability in dispute before it could file an appeal at the Tax Appeal Tribunal (TAT). Andersen argued that the model of tax dispute resolution, which it branded “Pay Now, Argue Later,” could be injurious to businesses on many levels.

”One possible impact that the new rule will have is that it may negatively affect the cash flow of businesses that are assessed to additional tax, if they have to pay half of the assessed amount prior to an appeal, whether the assessment is valid or not.

 “For any business, and especially those with low margins and weak cash flow, it can lead to immediate shock and possible collapse of the business depending on the quantum of tax assessed.

“This in turn can lead to job losses and closure of the business, with adverse social impact on other companies that have linkages to such businesses, including banks, financial institutions and investors that may have provided loans or invested in such businesses,” the article stated.