TAT rules that network facilities providers are not telecommunications companies liable to NITDA levy

On Friday, 3 February 2023, the Tax Appeal Tribunal (TAT or “the Tribunal”) sitting in Lagos held in INT Towers Limited(“INT” or “the Company” or “the Appellant”) vs the Federal Inland Revenue Service (“FIRS” or “the Respondent”) that a network facilities provider is not a telecommunications company and therefore not liable to pay the National Information Technology Development Agency (NITDA) levy pursuant to Section 12(2)(a) and Third Schedule to the NITDA Act.

Facts of the case

In 2021, INT filed its 2021 year of assessment (YOA) returns on the FIRS’ TaxPro-Max. Subsequently, the Company noted that the platform assessed it to NITDA levy of ₦488,103,920.09, being 1% of its profit before tax (PBT) payable by telecommunications company under the NITDA Act. INT wrote to the FIRS to clarify that it is an infrastructure service provider to the telecommunications companies and is, therefore, not liable to the NITDA levy imposed on telecommunications companies. The Company, therefore, requested the levy to be discharged. However, the FIRS invited the Company to a series of reconciliation meetings to resolve the issue.

Following the meetings between both parties, the FIRS issued a notice of assessment for the levy computed by the TaxPro-Max. INT objected to the assessment via its letter of 15 February 2022, wherein it maintained its position that the Company is not a telecommunications company as contemplated under the Third Schedule to the NITDA Act.

FIRS disagreed with INT’s position and issued a notice of refusal to amend (NORA). Aggrieved with the NORA, INT filed a Notice of Appeal before the TAT wherein it raised the following issues for determination:

1. Whether the Appellant is a telecommunicationscompany liable to payment of 1% profit beforetax levy imposed on telecommunicationscompany by Section 12(2)(a) and Paragraph (i) ofthe Third Schedule to the NITDA Act?
2. Whether this Honourable Tribunal has thejurisdictional competence to determine theconstitutional validity of the Section 12(2)(a) ofthe NITDA Act?
3. Whether the provisions of Section 12(2)(a) of theNITDA Act are unconstitutional, null and void,and unenforceable against the Appellant in lightof the provisions od Section 162(1) and 162(3) ofthe Constitution of the Federal Republic ofNigeria 1999 (as amended)

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