How to Challenge a Tax Assessment in Nigeria

A Nigerian company receives a tax assessment from the Nigeria Revenue Service (NRS) which it believes is excessive, incorrect, or based on a wrong application of the law. The company disputes the assessment. What can it legally do? A taxpayer is not required to simply accept an assessment because it was issued by the tax authority. The law provides a structured process for challenging a disputed assessment.

STEP ONE. OBJECT TO THE ASSESSMENT

Under the Nigeria Tax Administration Act, 2025, a taxpayer who disputes an assessment may serve a written Notice of Objection on the relevant tax authority. The objection must generally be delivered within 30 days from the date the disputed assessment was served. The notice must identify, among other things: The specific issues or errors being disputed; The monetary value of those issues; The amendments sought; The reasons supporting the proposed amendments; and The amount of tax admitted as payable, or that no tax is admitted as payable.

WHO SHOULD PAY ATTENTION?

The development is particularly relevant to: - Crypto traders - Investors - VASPs and exchanges - P2P marketplace operators - Businesses receiving crypto payments - Businesses using virtual assets for cross- border transactions - Other persons carrying on virtual-asset activities For businesses, this is not simply an issue for the finance team. It is now a compliance issue.

A TAX OBJECTION IS NOT A PROTEST LETTER

A weak objection says: "We disagree with the assessment." A strong objection demonstrates why the assessment is wrong. Your objection should reconcile: Assessment → Facts → Records → Applicable Law → Correct Tax Position The taxpayer should identify the precise items disputed and support its position with documentary evidence. This is where tax analysis, accounting records and legal strategy must work together.

WHAT CAN THE NRS DO?

Following an objection, the relevant tax authority may require further particulars, books, records and other documents relating to the assessment. It may also require a person to provide evidence in relation to the assessment. Where the taxpayer and the tax authority agree on the correct amount, the assessment may be amended and a revised notice of tax payable issued.

THE NINETY DAY RULE

The Nigeria Tax Administration Act, 2025 provides that the relevant tax authority should respond to the taxpayer's objection within 90 days. Where the authority fails to respond within that period, the Act provides that the taxpayer's objection shall be upheld. That makes the objection stage more than correspondence. It is a statutory stage in the dispute-resolution process.

STEP TWO. APPEAL TO THE TAX APPEAL TRIBUNAL

Where the objection is considered invalid, or the taxpayer and the relevant tax authority cannot agree on the amount of tax payable, the taxpayer may exercise its right of appeal. An appeal to the Tax Appeal Tribunal (TAT) is subject to the applicable statutory time limit and procedural requirements. The current framework provides a formal avenue for taxpayers to challenge assessments, demand notices and relevant decisions of a tax authority.

THE FIFTY PERCENT RULE: KNOW WHAT ACTUALLY APPLIES

There is an important distinction between an automatic 50% payment requirement and the Tribunal's power to order security. The current framework does not make payment of 50% of every disputed assessment an automatic precondition to bringing an appeal before the TAT. However, in specified circumstances, the Tribunal may order a taxpayer to deposit an amount on account of the disputed tax. The amount may be the lesser of: the tax charged for the preceding year; OR 50% of the tax charged by the assessment under appeal. A failure to comply with an order of the Tribunal can have serious consequences for the appeal.

STEP THREE: APPEAL BEYOND THE TAT

A taxpayer dissatisfied with a decision of the TAT may appeal to the High Court on a point of law, subject to the statutory requirements. The Nigeria Tax Administration Act, 2025 provides that the taxpayer must pay 20% of the disputed amount into an account designated by the High Court as security before the hearing of the appeal, and file evidence of the payment with the notice of appeal. Further appeals may lie to the Court of Appeal and ultimately the Supreme Court, in accordance with the applicable law.

THE STRATEGY MATTERS

A tax dispute should not be approached as a simple disagreement with the NRS. Before commencing or escalating the dispute, a taxpayer should assess: LEGAL MERITS Is the assessment legally supportable? EVIDENCE Can the taxpayer prove the factual position? QUANTUM How much of the assessment is genuinely disputed? PROCEDURE Have every statutory deadline and procedural requirement been satisfied? COMMERCIAL OUTCOME Would negotiation, settlement or litigation produce the better result?

PRESERVE YOUR EVIDENCE

A tax dispute may turn on the quality of the underlying records. Relevant documents may include: Tax returns and computations Financial statements Bank statements Invoices and receipts Contracts and agreements Withholding tax records VAT records Payroll records Tax correspondence Notices of assessment Supporting schedules and reconciliations Your objection should be built on evidence, not assertions.

DON'T MISS THE DEADLINE

A taxpayer's right to challenge an assessment is accompanied by strict procedural requirements. Do not wait until enforcement action begins before reviewing the assessment.

Identify the date of service. Calculate the deadline. Prepare the objection. Preserve the evidence. Protect the right of appeal.

Under the NTAA, a valid objection is generally required within 30 days, subject to the statutory provision permitting an extension for satisfactory and good cause.

FINAL A TAX ASSESSMENT IS NOT THE END OF THE MATTER.

But challenging it requires more than saying: "The NRS got it wrong."

It requires: Clarity. Evidence. Legal analysis. Procedural compliance. Strategic execution.