Overview
Tax disputes and the time it takes to resolve them are two of the biggest drags on internally generated revenue. To reduce the impact, tax laws often require taxpayers who challenge an assessment to pay a fraction of the assessed tax, or a fixed sum, as a security deposit. The payment is made pending the hearing and determination of the appeal.
The security deposit requirement has long been controversial in Nigeria. Debates have centred on its constitutionality, its validity, its fairness, and how the legal framework actually works in practice. The stakes are high on both sides: government revenue on one hand, and the protection of taxpayers' legal rights on the other.
This insight examines the statutory provisions and recent decisions that have shaped the Nigerian position on security deposits. It explains the distinct laws that provide for security deposits, reviews how the Tax Appeal Tribunal has applied them, and analyses the Tribunal's most recent pronouncements on the subject.
