Tax Litigation in Nigeria and A Review of Recent Nigerian Court Decisions on Taxation

Olumide K. Obayemi


In Nigeria, the tax system is progressive, with a top marginal rate of 25% with effect from 1996.[1] Nigeria is a nation with a fast-growing market that attracts a considerable amount of foreign investment.[2] With the recent global economic downturn, International Oil Corporations (IOCs)[3] are increasingly focused on exploring business opportunities in regions with significant projected growth opportunities such as Africa and Asia.[4] Several IOCs have recently flocked to Nigeria, a prominent West African country, with the recent stable political climate, immense population (about 170 million), and projected double digit growth rate, and so the country has quickly become a destination of choice for small and large international companies, alike, seeking to take advantage of the perceived business opportunities therein.[5]

Earlier on, on May 29, 1999, Nigeria returned to civilian democratic system jettisoning the autocratic military dictatorship, and, by this, opening the Nigerian oil and gas market to foreign direct investment (FDI), with emphasis on the relaxation of strictures imposed against influx of foreigners and foreign funds. Nigeria, therefore has witnessed tremendous increase in FDI.[6]. Along with FDI also came foreign expertise to manage the foreign investment transferred to Nigeria, i.e., closely associated with the flow of capital is the flow of skilled manpower and other requisite intangibles.[7]

Under Section 54 of the Companies and Allied Matters Act (CAMA),[8] every foreign company carrying on business in Nigeria is obligated to re-incorporate along with having a physical office address in Nigeria. In doing this, to adhere to domestic provisions and to pursue the business opportunities, The IOCs usually incorporate entities in Nigeria. Yet, such newly incorporated companies, which are predominantly staffed with indigenous citizens, do not always possess the necessary knowledge, experience, or skill sets necessary to carry out the business for which the company has been formed. Accordingly, it is common for such companies to employ the services of international experts commonly referred to as “expatriates” to perform these essential services.[9]

*Dr. Olumide K. Obayemi, ACIT, LL.B. (Hons); B.L. (Hons); LL.M. (Alberta Canada), LL.M. in Taxation Law; SJD in International Legal Studies is n Associate Member of the Chartered Institute of Taxation of Nigeria, and also a Senior Lecturer with Lagos State University, Lagos.

[1]. See Bimpe Balogun, Taxation of Expatriates, tax Practice Series No. 25, The Chartered Institute of Taxation of Nigeria (2003) at 1.

[2]. Olivia Agbajoh, Review of the Corporate Immigration Framework in Law & Human Rights—VANGUARD NEWSPAPER, August 22, 2013. Available at:

[3]. The term Corporations and companies are used interchangeably in this paper and they both refer to same thing—registered entity used by shareholders to carry on business with a separate personality aside from the business owners.

[4]. Akinbiyi Abudu, Taxation of Expatriates in Nigeria—Trap for the Unwary, in Ernst & Young: Our African Footprints. Tax focus News and updates across the African continent Issue 5, Vol. 51, 2011. Available at:

[5]. Ibid. at 19.

[6]. See, Deloitte, InsideTax: Determination of expatriate tax status: relevance of entry, visas & work permits, Available at:

[7]. Ibid.

[8]. CAMA refers to the current operative Companies/Corporations law legislation in Nigeria, known as the Companies and Allied Matters Act. This was formerly referred to as the Companies and Allied Matters Decree, 1990. However, by the consolidation of the Laws of the Federation of Nigeria in 1990, it was re-designated as the Companies and Allied Matters Act, Cap 59, Laws of the Federation of Nigeria, (LFN) 1990. This 1990 Act is now replaced and amended by the Companies and Allied Matters, Act Cap C20, Laws of the Federation of Nigeria (LFN), 2004. For ease of reference, it will be referred to as “CAMA” in this paper.

[9]. See, Akinbiyi Abudu, supra note 4, at 19.

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