The Nigerian tax scene witnessed notable shifts towards the end of 2023, setting the stage for anticipated trends in 2024.
Here are some highlights:
JB Daudu SAN v. Hon. Minister for Finance, Budget, and National Planning & Anor.
A significant legal ruling settled the long-debated issue regarding the constitutionality of rules mandating the prepayment of disputed tax assessments before appeal hearings. The Federal High Court (FHC) deemed such provisions unconstitutional, citing violations of fair hearing and appeal rights. This decision impacts various FIRS (Procedure) Rules 2021 and FHC (FIRS) Practice Direction 2021, ensuring a fairer appeal process for taxpayers.
MTN Communications v. FIRS
The Tax Appeal Tribunal (TAT) decision clarified that software licensing and upgrades constitute VAT-eligible supplies in Nigeria. This decision rested on the value addition aspect of software to a company’s assets. Additionally, the ruling affirmed FIRS’s authority to investigate tax law violations, regardless of fraud, and established VAT applicability to training by offshore facilitators conducted within Nigeria.
Exemption of Imports of Liquefied Petroleum Gas (LPG) from Import Duty and Value Added Tax
The Federal Government’s directive exempting LPG imports, machinery, and equipment from import duties and VAT aims to boost LPG supply for local needs and promote eco-friendly cooking practices, aligning with sustainability goals.
Outlook for 2024
In 2023, the formation of a Presidential Committee on Fiscal Policy and Tax Reforms signaled potential shifts in tax policies. The Committee’s Chairman hinted at discontinuing tax payments in foreign currencies for certain companies, emphasizing the use of Naira for domestic business operations. Furthermore, ongoing efforts to simplify tax legislation and suspend state taxes hindering corporate activities reflect a commitment to foster a conducive business environment.
These developments provide a glimpse into the evolving Nigerian tax landscape and suggest a focus on fairness, sustainability, and business-friendly tax frameworks in the year ahead.
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