This, Andersen noted, amounted to delineation of taxpayers by nationality and could create bias in the mind of the public against foreign-owned companies.
“Consequently, a routine tax audit of a foreign-based company that is profitable in Nigeria may trigger apprehension, given the perception that they are seen as worse offenders ab initio. As a matter of fact, the posture from the FIRS towards foreign-based companies may lead some to adopt the approach of being aggressive with tax planning, so that they can eventually concede to liabilities, which they believe the tax authorities will insist on establishing,” the firm said.
While it commended the FIRS increasing tax collection despite economic challenges, Andersen advised the agency to be restrained in taking actions and issuing statements capable of putting a question mark on companies’ reputations, especially in an age of social media and instant messaging. It added that it is more beneficial for tax agencies to appear friendly, fair and develop an awareness of reputational risk, especially given Nigeria’s unimpressive ease of doing business indices.
Andersen is the second major business advisory firm to question the position of FIRS. Last week, PricewaterCoopers, in its PwC Tax Alert, faulted the ruling of the Tax Appeal Tribunal on the dispute and its interpretation by the FIRS. The firm stated that the directive issued by the TAT does not compel MultiChoice to pay 50 percent of N1.8 trillion, being half of the disputed tax assessment before its appeal could be heard.
It said MultiChoice is only required “to deposit with FIRS an amount equal to the tax paid by Multichoice Nigeria in the preceding year of assessment or one half of the disputed tax assessment under appeal, whichever is the lesser amount, plus 10 per cent”.
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