In a bid to streamline the taxes and levies collectable by each tier of government within the Nigerian federation and also provide a legal regime to check arbitrary imposition of taxes and levies on individuals and businesses, the then Head of State, General Abdulsalami Abubakar, promulgated the Taxes and Levies (Approved List of Collection) Decree No. 21 of 1998. The Decree came into force on 30 September 1998. Upon Nigeria’s return to democracy in 1999, the Decree was deemed as an Act of the National Assembly by virtue of Section 315(1) of the Constitution of the Federal Republic of Nigeria, 1999 (as amended) (“the 1999 Constitution”) and is presently referred to as the Taxes and Levies (Approved List for Collection) Act 2004 (“the Taxes and Levies Act” or “the Act”).
Section 1(2) of the Act provides that “[t]he Minister of Finance may, on the advice of the Joint Tax Board and by Order published in the Gazette, amend the Schedule to this Act”. Acting pursuant to this Section, the then Minister of Finance, Dr. Ngozi Okonjo-Iweala, by an Amendment Order titled “Schedule to the Taxes and Levies (Approved List for Collection) Act (Amendment) Order, 2015” expanded the Schedule to the Act by including additional taxes and levies.
One significant value which the Act added to the tax administration in Nigeria was the allocation of taxing rights to the federating units. The Tax Appeal Tribunal (TAT) stated this much in Polaris Bank v Abia State Board of Internal Revenue (ABIRS) when it held that the Taxes and Levies Act was not meant to be the primary tax legislation in Nigeria but was only meant to allocate taxing rights to the three (3) tiers of government. In other words, in addition to the Act, there is a need for the relevant legislative authority to make a law imposing a specific tax or levy before it can be administered by a tax authority. Primarily, this decision underscores the fact that in the absence of primary tax legislation, a tax authority cannot solely rely on the Taxes and Levies Act or the Amendment Order to collect tax. From the text of the Act, it can be seen that what the law sought to achieve was to allocate the right to collect taxes to the three tiers of government in Nigeria. On this premise, the TAT’s decision in Polaris Bank cannot be faulted.
