Several Senior Advocates of Nigeria have recommended the best ways federal government agencies, such as the Federal Inland Revenue Service (FIRS) and other relevant authorities, can resolve tax-related disputes with multinational entities operating in Nigeria.
Their recommendations come in light of pending cases involving the FIRS, and multinational companies such as Binance and several oil and gas companies.
In an exclusive interview with Nairametrics, prominent lawyers shared their views on how federal agencies can handle these disputes amid growing concerns over job creation and unemployment in the country.
Disputes Against Multinationals
One of the ongoing disputes involves a lawsuit against Binance, which alleges that the cryptocurrency platform deliberately concealed its business activities despite having a “significant economic presence” in Nigeria.
The alleged violations include breaches of Nigeria’s Companies Income Tax (CIT) Act, the Federal Inland Revenue Service (Establishment) Act 2007, the CBN Regulatory Framework for Mobile Money Services, and the CIT Significant Economic Presence (SEP) Order.
In addition to Binance, federal agencies have sued other multinationals, including Meta, Coca-Cola, and Multichoice, citing violations of market practices.
Judgments on these cases are still pending, and there is a possibility that the litigation may reach the Supreme Court for final determination.
What Nigerian Lawyers Are Saying
Chief Rafiu Oyeyemi Balogun SAN, in an exclusive interview with Nairametrics, recommended arbitration as a key method for resolving disputes with multinational companies operating in Nigeria.
Arbitration is a formal process for resolving financial or contractual disputes without resorting to court proceedings.
- He emphasized that tax issues are governed by law worldwide, and compliance with existing regulations is mandatory.
- He added that the cases instituted by the FIRS and other federal agencies against multinationals are not improper or out of place.
- According to him, the FIRS is statutorily empowered to enforce income tax in Nigeria against alleged defaulters, whether related to personal income tax, corporate tax, or companies’ income tax.
He further stated that under the provisions of the Income Tax Act (as amended), in addition to civil actions to recover unpaid taxes, the government can initiate criminal proceedings against offending companies and their directors.
- However, he urged all parties to resolve matters amicably through arbitration, advising stakeholders and interested parties to remain calm and await the outcome—especially if arbitration does not yield a positive resolution.
Concerning the government’s legal actions against multinationals, he advised a cautious and diplomatic approach:
“We cannot afford to lose our investors. There will be adverse consequences on the economy if multinational entities leave Nigeria. We are battling unemployment, and nothing must be done to aggravate the situation. Arbitration is key to solving these issues. That is my take,” he concluded.
Ebun-Olu Adegboruwa SAN also told Nairametrics that he believes in arbitration.
- He advised that tax disputes should be handled through arbitration, given their commercial nature.
“And those companies are investors, so the government has to weigh between patriotism—ensuring revenue generation—and the need to allow profit-making for those who have invested in our economy,” he said.
- He stressed that there must be a balance between generating tax revenue and encouraging investors.
“So these tax disputes should not be subject to normal litigation, which is often delayed and frustrating due to inadequate infrastructure and limited judicial funding,” he added.
- He emphasized that arbitration would likely be a better alternative for pursuing unpaid tax claims, as it can fast-track resolution and provide clarity to all parties involved.
Chief Mike Ozekhome SAN noted that while tax disputes between the Federal Government and multinational companies are not new, they are becoming increasingly complex, contentious, and consequential.
- He explained that multinationals are business entities with significant operations and physical presence in more than one country, usually with a centralized headquarters in a developed economy.
“These entities are deeply involved in sectors such as oil and gas, fast-moving consumer goods, telecommunications, and infrastructure development,” he told Nairametrics.
- He further noted that the Nigerian tax system, largely overseen by the FIRS, imposes various taxes through federal legislation, which directly affect the income and activities of multinational enterprises.
He emphasized that taxation is not merely a financial obligation but a legal duty enforceable by statute—and defaulting entities may incur full tax liability.
“Despite Nigeria having over 440,000 registered companies, only about 120,000 are tax-compliant. Approximately 320,000 companies are in default, leading to a substantial loss of government revenue,” he added.
- He urged the government to strengthen the legal framework and modernize transfer pricing regulations, noting that many multinationals exploit cross-border tax loopholes.
- He also recommended that the government introduce structured alternative dispute resolution (ADR) options, including binding mediation and tax arbitration panels.
- He concluded by asserting that a commitment to enhancing legal and regulatory frameworks, boosting the FIRS’s administrative capacity, fostering agency collaboration, and leveraging technology would create a more robust and fair tax system—ensuring multinationals contribute their fair share while offering predictability for businesses in Nigeria.
George Ibrahim SAN told Nairametrics that a tax tribunal has already been established by Nigerian law to handle tax-related disputes.
Nevertheless, he advised that the government should sit down at the table with multinational companies to resolve these tax issues amicably.
“Then, going forward, they will need to comply squarely with the terms,” he said.
He emphasized that the global economy is unsettling for stakeholders, and the federal government and multinationals must collaborate to determine reasonable concessions for compliance, ensuring that, going forward, companies are ready to adhere to Nigerian tax laws.
