PROTECTION OF REVENUE OFFICIALS UNDER THE NIGERIA TAX REFORM LAWS

INTRODUCTION

The Nigerian tax reform laws, which include the Nigeria Tax Act (“NTA”), Nigeria Tax Administration Act (“NTAA”), Joint Revenue Board Act (“JRBA”), and Nigerian Revenue Service Act (“NRSA”), have reshaped the tax landscape in Nigeria. These Acts have repealed, revoked, amended and introduced new laws and procedures for tax administration in Nigeria. Part of the changes made include the replacement of the Federal Inland Revenue Service (“FIRS”) with the Nigerian Revenue Service (“NRS”); and the Joint Tax Board (“JTB”) with the Joint Revenue Board (“JRB”) (altogether referred to as ‘Relevant Tax Authorities’). 

Tax administration in Nigeria sometimes could be adversarial, in that the activities of the Relevant Tax Authorities may be subject to litigation. Against this backdrop, the NRSA and JRBA contain protective provisions for the protection of revenue officials, similar to what is obtainable in the Public Officers Protection Act (“POPA”).

Nevertheless, these safeguards must also be weighed against taxpayers’ constitutional rights to a fair trial under Section 36 and access to the courts under Section 6 of the Constitution of the Federal Republic of Nigeria, 1999.

PROTECTION OF REVENUE OFFICIALS

Section 54 of the JRBA and 35 of the NRSA provide that the provisions of the Public Officers Protection Act shall apply in relation to any suit instituted against any member of the Board, the Executive Secretary, officer or employee of the Board or the Board itself.

According to Section 2(a) of the POPA, a public officer cannot be the target of an action, prosecution, or proceeding unless it is initiated within three (3) months of the act, neglect, or default that is being complained of; or where the action or omission complained of is continuous, the action cannot be continued against the said public officer after three (3) months from the cessation of the act(s) or omission.

This is comparable to Section 54(2) of the JRBA, which states that no lawsuit may be filed against the Board, Executive Secretary, a Board member, or an employee of the Board for any act carried out under or in execution of this Act, or for any alleged neglect or default, unless it is filed:

(a) within six (6) months of the act, neglect, or default complained of, or

(b) within six (6) months of the discontinuation of the damage or injury.

Unlike Section 2(a) of the POPA, the JRBA extends the limitation period for instituting an action to six (6) months, which is a significant development which allows more room for parties to navigate their dispute before resorting to litigation.

Similar provision is also made in Section 35(2) of the NRSA, which provides that no suit against the Service, Executive Chairman, member of the Board, or any other officer or employee of the Service for any act done under this Act, any other law, any public duty or authority, or in respect of any alleged neglect or default in the execution of the provisions of this Act, shall lie or be instituted in any court unless it is commenced

(a) within three (3) months after the act, neglect, or default complained of; or

(b) in the case of a continuation of damage or injury, within six (6) months after the cessation of such damage or injury.

PRE-ACTION NOTICE

To further protect revenue officials, Section 54(3) of the JRBA and Section 35(3) of the NRSA provide that no suit shall be commenced against the Board, the Service, the Executive Secretary, the Chairman of the Service, a member of the Board, or an employee of the Board until one (1) month after a written notice of intention to commence the suit has been served on them by the intended plaintiff or their agent. Subsection (4) of both laws requires that the written notification must explicitly include the following:

(a)   the cause of action;

(b)   the specifics of the claim; 

(c)   the intended plaintiff’s name and address; and

(d)   the relief that would be sought.

RESTRICTION ON EXECUTION

Sections 37 and 56 of NRSA and JRBA, respectively, create two (2) levels of protection to the Service and the Board in the enforcement of tax judgments, namely:

i.               Moratorium on enforcement

ii.             Attachable Fund/Asset.  

i.           Moratorium on Enforcement:

Provisions of sections 37(1) of NRSA and section 56(1) of JRBA impose a 3-month notice of intention to execute or attach on any execution or attachment of processes to be issued to the Service and the Board. In essence, the provisions have created a three (3) month moratorium for both the Service and the Board before a judgment debt can be enforced against them. This provides the Relevant Tax Authorities ample opportunity to evaluate the decision(s) against them and decide whether to appeal against the judgment or employ alternative means to resolve the dispute.

As noble as the intention of the drafters is, these provisions may have unwittingly created legal uncertainty, as they tend to contradict the provision of section 20 of the Sheriffs and Civil Process Act and judicial authorities to the effect that judgments of the courts in Nigeria are immediately enforceable.

ii.             Attachable Fund/Asset:

Under both the NTAA and the JRBA, judgment debts are only payable from the funds of the Tax Bodies, which in effect protects officers of the Relevant Tax Authorities from personal liabilities resulting from their official functions. These provisions align with the established principles of agency and vicarious liability and inure to safeguard the officers of the Relevant Tax Authorities from incurring liability from the discharge of their duties, which may affect their productivity.

INDEMNITY

Section 38 of the NRSA and Section 57 of the JRBA protect officials from any personal expenditure by making provisions which indemnify Executive Chairman, Executive Director, member of the Board or any officer or employee of the Service out of the assets of the Service against any liability incurred in defending any legal proceeding, brought against them in their capacity as Executive Chairman, member of the Board, officer or other employee of the Service.

CONCLUSION

While the NRSA and JRBA protect revenue officials from unwarranted suits and personal exposure, these safeguards may inadvertently create legal ambiguity or foster executive recklessness if not carefully administered. 

ABOUT AO2LAW

At AO2LAW, we maintain a foremost Tax Practice. Situated within our Commercial and Criminal Law Practice Group (CCLP), our Practice brings to bear our expertise in core tax advisory, representation and management. We routinely assist organisations and individuals in Nigeria or whose commerce interacts with Nigeria, in their compliance efforts and preservation of their global tax rights.

For further information on the foregoing or related matters, please contact us at info@ao2law.com; +234 807 776 5149, or any of the key contact details.

 Please do not treat the foregoing as legal advice, as it only represents the public commentary views of the authors. All enquiries on this should please be directed to the authors.