Check Point Software Technologies challenged the Federal Inland Revenue Service (FIRS) after receiving administrative penalty notices for late filing of Country-by-Country (CbC) reports for 2019 and 2020. The company argued that the 2018 CbC Regulations were invalid because they were not issued by a properly constituted FIRS Board, as required by Section 61 of the FIRS Act.
The appellant further contended that the FIRS could not enforce regulations based on an international treaty (OECD Multilateral Competent Authority Agreement) not ratified by Nigeria’s National Assembly, a constitutional requirement under Section 12 of the 1999 Constitution. They requested the court to nullify both the regulations and the penalty notices.
In response, FIRS asserted its authority to issue the regulations under Section 61 of the FIRS Act, with approval from the Minister of Finance. The agency maintained that Regulation 13 empowered it to impose penalties on multinational companies for late or non-filing of CbC notifications, urging the tribunal to dismiss the appeal.
However, the Tax Appeal Tribunal found that during the relevant period, the FIRS Board was dissolved and had not been reconstituted, meaning it lacked the legal authority to enact the regulations. Tribunal Chairman Professor A.B. Ahmed emphasized that delegated powers must be exercised strictly by the designated authorities, which in this case was the properly constituted FIRS Board.
Consequently, the Tribunal declared the 2018 CbC Regulations and the penalty notices invalid and unconstitutional. It instructed FIRS to issue fresh penalty notices in accordance with the proper laws and authorities.
Unsatisfied, FIRS appealed, but on May 5, 2025, the Federal High Court, Lagos Division, upheld the Tribunal’s ruling. The court confirmed that FIRS lacked legal authority to enact the CbC Regulations due to the absence of a legally constituted board. It further ruled that the regulations were unconstitutional since they relied on an international agreement not domesticated by Nigeria’s legislature.
The court’s decision aligned with the tribunal’s view that the regulations were ultra vires (beyond legal power) and void, reinforcing the principle that regulatory bodies must act within their statutory mandates.
