Nigeria: Interest and penalties do not apply to timely contested VAT assessments (Tax Appeal Tribunal decision)

A Tax Appeal Tribunal decision concerning whether interest and penalties apply to timely contested VAT assessments

Interest and penalties do not apply to timely contested VAT assessments

The Tax Appeal Tribunal Lagos Zone held that interest and penalties do not apply to additional assessments of value added tax (VAT) that a nonresident taxpayer validly objected to within the stipulated statutory period.

The case is: MTN Nigeria Communications Plc v. Federal Inland Revenue Service

The tribunal found that the provision of software licenses and upgrades by the taxpayer who was not located in Nigeria was a taxable supply of goods or services for VAT purposes because such services were consumed in Nigeria. However, the tribunal held that the tax authority cannot impose interest and penalties on additional VAT assessments that the taxpayer objects to within the statutory period for objection. The assessment does not become final and conclusive once timely objected to by the taxpayer.

KPMG observation

It is unclear whether the Federal High Court (FHC) will uphold this judgment because it held in another case (CMA CGM Delmas v. Federal Inland Revenue Service) that objecting to a tax assessment within the stipulated period does not absolve a taxpayer from the obligation to pay interest and penalties on additional tax assessment arising from audits.

Read an November 2023 report [PDF 1 MB] prepared by the KPMG member firm in Nigeria


The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 3712, 1801 K Street NW, Washington, DC 20006.