The Federal High Court, Lagos Division, has upheld the decision of the Tax Appeal Tribunal (TAT) nullifying the Income Tax (Country-by-Country Reporting) Regulations 2018, issued by the Federal Inland Revenue Service (FIRS). The court ruled that the regulations, and the administrative penalties imposed under them, were unconstitutional and without legal foundation.
The judgment, delivered on May 5, 2025, followed an appeal by FIRS against the TAT’s earlier decision in favour of Check Point Software Technologies B.V Nigeria Ltd, which had challenged the legality of the penalties imposed for late submission of the 2019 and 2020 Country-by-Country (CbC) notifications.
Check Point argued that the CbCR Regulations 2018 were invalid as they were not made by a duly constituted FIRS Board, as mandated by Section 61 of the FIRS (Establishment) Act. The company also contended that the CbCR framework, based on the OECD’s Multilateral Competent Authority Agreement, lacked legal force in Nigeria because it had not been ratified by the National Assembly, in accordance with Section 12 of the 1999 Constitution.
The TAT had earlier ruled in favour of Check Point, holding that only a properly constituted Board of the FIRS has the authority to enact such regulations. The tribunal found that the FIRS Board was not in existence when the CbCR Regulations were issued in 2018, rendering them null and void. It also declared the administrative penalties imposed by FIRS on the appellant as unconstitutional.
In its judgment, the Federal High Court concurred with the tribunal’s reasoning. The court held that the FIRS acted ultra vires by issuing the CbCR Regulations without a validly constituted Board. Furthermore, it ruled that the OECD agreement forming the basis of the regulation had no legal effect in Nigeria due to its non-domestication by the National Assembly.
The court concluded that both the regulations and the penalties issued under them lacked constitutional backing and must be set aside. However, it advised the FIRS to issue fresh administrative notices based strictly on extant provisions of the FIRS Act and relevant tax laws.