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From facts, the Appellant- Check Point Software Technologies had submitted that Despite the Appellant’s letters of objection to the Notices of Administrative Penalties dated 10th day of March, 2022 and 15th day of March, 2022 respectively for late filing of the 2019 and 2020 Country by Country Notifications under the CBC Regulations, 2018, the Respondent has not withdrawn the Notices.
The Check Point Software Technologies argued that the CBC Regulation 2018 NOT made by the Board of the FIRS as mandatorily required by Section 61 of the FIRS Act is illegal, unconstitutional, null and void and hence liable to be quashed by the Tribunal as well as the Notices of Administrative penalties served on the Appellant by the Respondent on the enforcement of same.
The Appellant averred that, the Respondent can’t hide behind the veil of delegated legislation as a disguise to make regulations seeking to enforce in Nigeria an International Multilateral Agreement/Treaty not yet ratified by the National Assembly as compulsorily required by Section 12 of the 1999 Constitution, and urged the Court to grant the reliefs sought.
In response, the Respondent-FIRS maintained that, by virtue of Section 61 of the FIRSE Act and all other powers enabling the FIRS Board, with the approval of the Honorable Minister of Finance, the Income Tax (Country by Country Reporting) Regulations 2018 were made. T
The FIRS stated that, Regulation 13 of the Income Tax (Country-by-Country Reporting) Regulation 2018 empowers the Respondent to levy penalties on Constituent Entities of Multilateral Enterprises (MNE) Groups as defined under Regulation 16 of the Regulations for late and non-filing of the CBCR Notification.
The FIRS urged the Honourable Tribunal to uphold the administrative regulations of the FIRS and to set aside the Appeal filed by the Appellant as it is a deliberate attempt to obstruct the administration of the Respondent’s duties and obligations.
In a well-considered judgment, the Tribunal held that it is only the Board of FIRS and legally constituted and properly composed body that can exercise the said powers donated by the National Assembly in Section 61.
The Tribunal reasoned that the Appellant had presented concrete evidence before the Honourable Tribunal that during the period under consideration the Boards of all federal parastatals and agencies (including that of the Federal Inland Revenue Service) were dissolved and had not been reconstituted.
The Tribunal Panel Chairman, PROFESSOR A. B. AHMED ESQ reiterated that the exercise of delegated powers must always be in strict compliance with the enabling Act and that such powers can only be exercised by the specific person or body addressed, which powers cannot be delegated.
The Tribunal ruled that the FIRS purported Regulation on CBC of 2018 was not made by the Board of the Federal Inland Revenue Service that was legally constituted and properly composed, and declared the Notices of the Administrative Penalties served on the Check Point Software Technologies by the Respondent in the enforcement of the CBC Regulation 2018 as unconstitutional and void.
In its wisdom, the Tribunal directed the FIRS to raise fresh Notices of the Penalties based on the relevant provisions of the Federal Inland Revenue Service (Establishment) Act, 2007 and relevant laws on the Check Point Software Technologies.
APPELLATE COURT DECISION
Not satisfied, the FIRS appealed against the decision of the Tax Appeal Tribunal. On 5 May 2025, the Federal High Court, Lagos Division, affirmed the Tax Appeal Tribunal’s decision setting aside administrative penalties imposed by the Federal Inland Revenue Service (FIRS) on Checkpoint Software Technologies B.V Nigeria Ltd. The Court held that the FIRS lacked the legal authority to issue the Country-by-Country Reporting (CbCR) Regulations 2018 in the absence of a duly constituted Board, as required under the FIRS Establishment Act.
The Court further ruled that the FIRS Regulations were unconstitutional, having been made pursuant to the OECD Multilateral Competent Authority Agreement, which has not been domesticated by the National Assembly in accordance with Section 12 of the 1999 Constitution (as amended).
The Federal High Court aligned with the decision of the Tribunal that at the time of the CbCR Regulations were issued, the FIRS Board was not properly constituted. The Court held that this invalidated the regulatory authority of the FIRS to enact such guidelines, rendering them ultra vires and of no legal effect.
