Law revision exercise

In September 2000, Chief Bola Ige (SAN), who was the attorney general of the federation and minister of justice at the time, constituted a Law Revision Committee to prepare a revised edition of the Laws of the Federation up to 2000 within three months.Footnote ⁹ The committee was given such a short deadline ostensibly as a response to the policy to produce a revised edition of the Laws of the Federation at ten year intervals.Footnote ¹⁰ However, due to various chains of eventsFootnote ¹¹ the exercise was not completed until 2004 or given the necessary legal effect until 2007.Footnote ¹² Consequent upon the delay in missing the initial target of 2000, the revision of the laws was updated to 31 December 2002Footnote ¹³ and eventually published as LFN 2004. The various tax laws contained in LFN 1990 accordingly bear new chapters in the LFN 2004 edition. Thus the Companies Income Tax Act cap 60 of LFN 1990 (CITA 1990) became cap C21 of LFN 2004 (CITA 2004), and the Capital Gains Tax cap 43 of LFN 1990 became cap C1 of LFN 2004.

The Law Revision Committee had exercised the usual powers essential to a successful law revision exercise by altering the language of law-making. For instance, “decrees” were accordingly redesignated as “acts”, while references to the office of “head of state” and other military titles in LFN 1990 were amended to reflect references to “president” under the constitution. Certain institutions of state, such as ministries and agencies, were renamed or abolished with a consequential impact on references to them in existing legislation.Footnote ¹⁴ Furthermore, the Law Revision Committee made the usual omission of repealed and spent statutes, consolidated statutes where necessary and made such consequential alterations and adaptations as were necessary and proper to streamline them with the provisions of the 1999 constitution and the circumstances of the democratic structure of governance.Footnote ¹⁵

The amendments introduced by the various taxation (miscellaneous provisions) decrees which were hitherto differentiated alphabetically were renumbered in LFN 2004. Through this differentiation, it is easy to recognize provisions which were later introduced through subsequent amendments from the original provisions. For example, whereas CITA 1990 had 85 sections, 21 amendments were introduced after 1990 through various finance (miscellaneous taxation provisions) decreesFootnote ¹⁶ which were reflected as sections 1A, 8A, 14A, 15A, 21A, 28A–G, 40A, 40AA, 40B, 40C, 41A, 41B, 45A, 64A, 64B and 67A. Thus, although the contents of CITA 1990, as amended, had significantly increased, the 85 section structure was still maintained. However, with the renumbering in 2004 LFN, CITA 2004 has 106Footnote ¹⁷ sections compared to the 85 sections of CITA 1990.

Ordinarily, the publication of LFN is seen as a milestone by the legal community and everyone who is interested in Nigerian laws for a number of reasons.Footnote ¹⁸ The revised law is however not self-executing, as an act of Parliament is required to proclaim it officially as the revised Laws of the Federation of Nigeria in force. Regrettably, the requisite act to give effect to LFN 2004 did not come until three years later with the enactment of the Revised Edition Act. Meanwhile, the tax reform exercise of the Nigerian federal government based on LFN 1990 had developed a life of its own.

Tax reform exercise

Following the recommendations of the Tax Study Group,Footnote ¹⁹ the federal government set up the Working GroupFootnote ²⁰ to review the report of the Tax Study Group on the Nigerian tax system. Following these developments, the Nigerian federal government initiated nine executive bills in the National Assembly during 2005 to establish a legal framework for the federal government's tax reform exercise.Footnote ²¹ The bills were for acts to: establish FIRS; amend the Companies Income Tax Act; amend the Personal Income Tax Act; amend the Value Added Tax Act; amend the Petroleum Profits Tax Act; amend the Education Tax Act; amend the National Sugar Development Council Act; amend the National Automotive Council Act; and amend the Customs, Excise Tariffs etc (Consolidation) Act.Footnote ²²

Since these nine bills were introduced in the National Assembly after the publication of LFN 2004, they were based on the provisions of LFN 2004, in the expectation that the National Assembly would soon give LFN 2004 the requisite legal backing. However, this seemingly reasonable expectation was dashed as a result of an unanticipated delay in enacting the requisite law to give LFN 2004 legal effect. As the endorsement or validation of LFN 2004 by the National Assembly became elusive, the credibility and legality of LFN 2004 became an issue.Footnote ²³ Against this background, the Joint Finance Committee of the Senate and the House of Representatives, responsible for harmonizing the views of the two chambers of the National Assembly, was forced to direct FIRSFootnote ²⁴ to re-prepare the bills based on LFN 1990, which was officially the revised edition in force at the time. This meant that FIRS had to return to the drawing board notwithstanding the costs in terms of time and resources.Footnote ²⁵ The National Assembly was only able to pass the following four of the bills into law before the end of its term,Footnote ²⁶ and they were duly signed into law by the president with effect from 16 April 2007: Companies Income Tax (Amendment) Act, 2007; Value Added Tax (Amendment) Act, 2007; Federal Inland Revenue (Establishment) Act, 2007; and the National Sugar Development Council (Amendment) Act, 2007.Footnote ²⁷

Repeal of LFN 1990

Three months after the enactment of the three tax statutes noted above, the Revised Edition Act was enacted with effect from 25 July 2007. The long title of the act proclaims its main objective to be: “[t]o enable effect to be given to the revised edition of the Laws of the Federation of Nigeria”. Section 1 provides that: “[t]he Laws of the Federation of Nigeria compiled and published in 2004 under the authority of the Attorney General of the Federation and Minister of Justice are hereby approved by the National Assembly”. In order to pave way for the application of LFN 2004 and eclipse that of LFN 1990, section 3 provides: “[t]he Revised Edition (Laws of the Federation of Nigeria) Act 1990 is hereby repealed.”

With the express repeal of LFN 1990, one would have expected FIRS, tax consultants and other stakeholders in the Nigerian tax industry immediately to embrace the LFN 2004 version of the tax laws. This reasonable expectation was, however, dashed due to a fundamental problem: the Amendment Act was based on LFN 1990 which was the extant law at the time the amendments were made. With the incorporation of the post-1990 amendments to the tax laws and the consequential renumbering in LFN 2004, there is a significant mismatch between LFN 1990 and LFN 2004. Thus, a reference to a section relating to a particular subject matter under LFN 1990 will refer to an entirely different subject matter in LFN 2004 which will render the amendment meaningless. This will be demonstrated by three practical examples. Section 4 of the Amendment Act seeks to amend section 14 of CITA 1990 on the taxation of insurance companies by providing a new basis for the computation of insurance companies' profits. However, section 14 in LFN 2004 provides for the taxation of companies engaged in shipping or air transport. Also, section 8 of the Amendment Act sought to delete sub-section (2)(a)(iii) of section 27. However section 27 of CITA 2004 has no sub-section (2).Footnote ²⁸ Furthermore, sections 8, 9, 13 and 14 of the Amendment Act sought to amend sections 28B, 28F, 14A and 41B of CITA 1990, although there are no sections 28B, 28F, 14A and 41B in LFN 2004.

Legal effect of omissions in LFN 2004

A law revision exercise is daunting especially in the type of legal environment that existed under military rule in Nigeria. The chaotic and unregulated manner in which enactments were made during the military era made the tracking of existing legislation of that era very difficult. The position was captured graphically in the preface to A Guide to the Federal Statutes Footnote ²⁹ as follows: “the 554 Decrees passed between 1990 and May 1999 are scattered in different issues of the weekly or extraordinary editions of the Official Gazette. But the problem is even more than that. It has been difficult if not impossible in some cases to obtain copies of the Decrees.”Footnote ³⁰ Against this background, it is not unlikely that the Law Revision Committee might inadvertently omit some statutes. Indeed, LFN 2004 did omit a number of existing tax provisions which had neither been repealed by any legislative enactment nor declared invalid by judicial pronouncement. For instance, the fifth schedule to LFN 2004 omits the name of the following bodies and institutions to which deductible donations may be made: Nigeria Conservation Foundation; Nigeria Accounting Standard Board; Kewaram Chenrai Foundation Ltd; Afprint Foundation Limited; Paterson Zochinis Nigeria Technical Education Trust Fund; Educational Cooperative Society; National Science and Technology Fund; and Rotary International Polio Plus. It also omitted the Double Taxation Relief (Between the Federal Republic of Nigeria and the United Kingdom of Great Britain and Northern Ireland) Order 1988.

The question is whether the omission of these provisions renders them inapplicable? The answer is in the negative, as the continued validity and applicability of the provisions are safeguarded by the express provisions of section 2 of the Revised Edition Act which provides that: “[a]ny inadvertent omission, alteration or amendment of any existing statute shall not affect the validity and applicability of the statute.”

In Ibidapo v Lufthansa Airlines Footnote ³¹ the appellant was a passenger on the respondent's aircraft flight LH561 from Lagos to Frankfurt on 16 January 1987. The appellant checked in along with luggage containing an IBM typewriter which he claimed he bought for $1,785. On arriving at Frankfurt the next day, the typewriter was missing and the appellant promptly lodged a complaint with the respondent. Efforts by the respondent to locate the luggage failed and the respondent offered the appellant compensation of DM 749. The appellant was unhappy about the offer made to him and communicated his displeasure to the respondent. The respondent made no reply. On 21 March 1989, the appellant issued a writ of summons against the respondent for negligence and breach of contract. After pleadings had been filed, the respondent brought an application to determine at the outset the issues of law raised in his statement of defence: that, by article 29(1) of the Warsaw Convention annexed as a schedule to the Carriage by Air, (Colonies, Protectorates and Trust Territories) Order, 1953 (1953 Order), the action should have been brought within two years of the loss of the typewriter. The learned trial judge upheld the application and dismissed the appellant's claim. The appellant appealed to the Court of Appeal and, having also been dismissed, further appealed to the Supreme Court. The appellant's main contention was that the 1953 Order making the Warsaw Convention applicable in Nigeria had ceased to be an existing law in Nigeria based on the fact that it had been omitted from LFN 1990. The Supreme Court held that the 1953 Order still subsists, since it has neither been repealed nor declared invalid. According to Wali JSC (as he then was):

Is continued reference by FIRS to LFN 1990 legal?

Since the Amendment Act was based on the provisions of LFN 1990 and could only be intelligible when read together with LFN 1990, the relevance of LFN 1990 did not immediately diminish as one would have expected, notwithstanding that it had been repealed with effect from 27 May 2007 by the Revised Edition Act. While this initial approach to understanding the scope and effect of the new tax laws is sensible and practical in the short term, what is rather astonishing is that FIRS has continued to cite the provisions of LFN 1990 in its official dealings with taxpayers and consultants.Footnote ³³ Although this issue is yet to give rise to controversy in practice, it is arguable that a taxpayer may successfully challenge an assessment on the basis that it was made pursuant to a non-existent statute. Section 70 of CITA 2004 may not salvage, redeem or sustain the validity of the assessment. This section, which enacts what can be described as a de minimis rule, is reproduced below for ease of reference:

In the author's opinion, these provisions will only accommodate any mistake, error, omission or commission by FIRS when acting pursuant to a valid law. The provision will only avail where (i) the assessment in substance and effect conforms with or according to the intent and meaning of CITA and (ii) notice has been duly served on the taxpayer or his agent. The provisions cannot by any stretch of the imagination be said to envisage that assessment will be carried out under a non-existent law. It is submitted that this provision is not an alibi for crass negligence or ignorance of what is the correct applicable law. If an assessment is based on a non-existent law, the assessment is arguably null and void from the outset as one cannot put something on nothing.Footnote ³⁴

The repeal of a law renders it legally impotent for the purpose of effecting legal rights in terms of conferring benefits or imposing obligations. When an act is repealed it is taken as though it never existed.Footnote ³⁵ The term “repeal” means to rescind or abrogate an existing law by a legislative act.Footnote ³⁶ Tinda CJ in Kay v Godwin Footnote ³⁷ said, “I take the effect of repealing a statute to be to obliterate it as completely from the records of the Parliament as if it had never been passed; and it must be considered as a law that never existed”. The same principle was applied in Surtess v Ellison. Footnote ³⁸ Therefore, in view of the express repeal of LFN 1990 by the Revised Edition Act, it is submitted that any continued reference to LFN 1990 by FIRS and consultants is questionable and not in accordance with the law. The point being made here is that the use of LFN 1990 in legal documents, judicial and legislative proceedings, legal opinion, etc as reference to the extant tax law in Nigeria is most inappropriate, wrong and illegal, the law having been repealed by the Revised Edition Act and replaced with LFN 2004.

The guiding principle for the interpretation of a tax statute is well established. Tax statutes are interpreted strictly. The principle was expressed by Rowlatt J in Cape Brandy Syndicate v IRC thus: “[i]n a taxing Act, one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One has to look fairly at the language used.”Footnote ³⁹

This judicial attitude to the interpretation of tax statutes promotes certainty, which is one of the most important requisites of a good law. In Coltness Iron Company v Black, Lord Blackburn said: “[n]o tax can be imposed on the subject without words in any Act of Parliament clearly showing an intention to lay a burden on him. But when that intention is sufficiently shown, it is, I think, vain to speculate on what would be the fairest and the most equitable mode of levying that tax.”Footnote ⁴⁰

Danckwerts LJ was no less emphatic in Mapp v Oram when he posited that: “[i]n my view, it is not admissible by speculatively attributing to Parliament an intention on the ground that it might be fair and reasonable to bring into a statute provisions which are not to be found in the statute. The provisions of the statute must be taken as they are and the court is not at liberty to improve them because a situation which might be anticipated is not provided for.”Footnote ⁴¹

This approach has been applied in a number of Nigerian cases such as SA v Regional Tax Board Footnote ⁴² and Aderawos Timbers Trading Company Ltd v FBIR.Footnote ⁴³

Implied repeal of the Companies Income Tax (Amendment) Act 2007

Although three tax statutes were enacted in 2007,Footnote ⁴⁴ only the Amendment Act seems to be drastically affected by the repeal of LFN 1990, being the only statute among the three that sought to amend a statute that pre-dates the law revision exercise of 1990.Footnote ⁴⁵ Since the Amendment Act was based on CITA 1990, any repeal of LFN 1990 would certainly upset the legal basis of the Amendment Act. Accordingly, the drastic, though unintended, effect of the repeal of LFN 1990 is the implied repeal of the Amendment Act. Although the Amendment Act and the Revised Edition Act came into force in 2007, the former became effective at least one month earlierFootnote ⁴⁶ than the latter,Footnote ⁴⁷ making the latter the latest expression of the will of the legislature; as such it must prevail. It is well established that, where two acts are inconsistent or repugnant, the later will be read as having impliedly repealed the earlier, based on the principle that the latest expression of the will of Parliament must always prevail.Footnote ⁴⁸

It is submitted that a repeal of LFN 1990 by the Revised Edition Act is tantamount to an implied repeal of the Amendment Act. Repeal may be by express provision or by necessary implication. In Re Williams, North J held that “the provisions of an earlier Act may be revoked or abrogated in particular cases by a subsequent Act, either from the express language used being addressed to the particular point, or from implication or inference from the language used”.Footnote ⁴⁹ To constitute an express repeal, there must be not only a reference to the prior act, but also the use of words apt to effect its repeal. The language of section 3 of the Revised Edition Act expressly and unequivocally provides that “the Revised Edition (Laws of the Federation of Nigeria) Act 1990 (LFN 1990) is hereby repealed”.Footnote ⁵⁰

With the express repeal of LFN 1990, the foundation on which the Amendment Act was based had been removed. Therefore, one need look no further for any express repeal provisions in this regard as it is not necessarily based on the doctrine of implied repeal. A repeal of LFN 1990 is tantamount to a repeal of the Amendment Act, since the latter was enacted in order to effect some modifications to the former. The principle of implied repeal has been given statutory backing in section 4(2) of the Interpretation Act: “[w]here an enactment is repealed and another is substituted for it, then – (a) The repealed enactment shall remain in force until the substituted enactment comes into force; (b) Any reference to the repealed enactment shall, after the substitute enactment comes into force, be construed as a reference to the substituted enactment.”

As pointed out above, placing the two acts side by side reveals many incongruities, conflicts and inconsistencies that are irreconcilableFootnote ⁵¹ except by fresh legal intervention. This is because the legislature never intended to apply the Amendment Act to any act except CITA 1990 (now repealed). Also, the legislature never intended that the Amendment Act should stand alone as an amending statute. The provisions of the Amendment Act, therefore, have no redeeming value since the act can neither stand on its own nor be meaningfully read together with CITA 2004. The bottom line is that the entire tax reform processes that led to the Amendment Act seem to have come to nought.