The South-South Zone of the Tax Appeal Tribunal sitting in Benin has ordered Ecobank Nigeria to pay the sum of N5.3 million to the Akwa Ibom State Internal Revenue Service as Urban Development and other sundry levies covering the 2020–2021 tax assessment years.
The ruling followed a detailed review of competing claims arising from a revised tax assessment issued against the bank by the state revenue authority.
The tribunal, however, struck out a significant portion of the disputed assessment after holding that the Akwa Ibom State Internal Revenue Service failed to establish a clear, verifiable, and lawful basis for its N28.36 million PAYE tax demand.
It found that the so-called “undisclosed income” used in computing the liability was not properly linked to employee emoluments, as required under the Personal Income Tax Act, and therefore lacked legal justification.
Ecobank Nigeria had challenged the assessment in its entirety, arguing that the tax authority failed to provide a proper breakdown of the alleged liabilities and ignored evidence of prior tax remittances already made by the bank.
The financial institution contended that parts of the assessment were based on branches that were not operational within the relevant period, and insisted that the figures presented by the revenue service were inflated and unsupported by credible documentation.
In response, the Akwa Ibom State Internal Revenue Service maintained that Ecobank’s failure to make complete records available and its alleged non-cooperation during audit verification necessitated reliance on available financial statements and intelligence reports.
The agency argued that discrepancies identified in the bank’s records justified the inclusion of additional taxable income.
Delivering judgment, the tribunal chaired by Anselm Unimna, with members including Asoro Osariuyimen, Ofiafoh Eiya, Sunday Aborisade Esq., and Olayinka Adewale held that tax authorities are bound to base assessments on credible evidence and lawful computation.
It ruled that any assessment not anchored on statutory provisions or verifiable financial data is liable to be set aside.
The tribunal held that under the Personal Income Tax Act, PAYE liabilities must arise strictly from employee emoluments, adding that attempts to tax “undisclosed income” without a clear nexus to salaries were unlawful and unsustainable.
It described the computation used by the revenue service as arbitrary, noting that no adequate breakdown or methodology was provided to support the figures.
On the issue of withholding tax, the tribunal accepted Ecobank’s documentary evidence of remittances, stating that the revenue authority failed to successfully challenge or disprove the records submitted. Consequently, it held that the bank had discharged its tax obligations in that regard.
However, on the Urban Development and sundry levies, the tribunal found that Ecobank failed to provide consistent and credible evidence to support its claim that certain branches were not operational during the relevant period.
It noted contradictions in the bank’s witness testimony, which weakened its position on that aspect of the dispute.
Accordingly, the tribunal ruled that while the PAYE and withholding tax assessments were unfounded and were hereby set aside, the sum of N5.31 million assessed as Urban Development and other sundry levies remained valid and payable by the bank.