House Committee Seeks AGF Legal Opinion on TETFund Deductions

• The House of Representatives is mediating a N123.48 billion dispute between the Nigeria Revenue Service and the Tertiary Education Trust Fund.
• The disagreement concerns a four percent collection cost deducted by the NRS from Education Tax revenues between 2012 and 2024.
• TETFund argues the deduction should not apply to Education Tax from oil companies, while NRS maintains its legality under Sections 15A and 69 of the NRS Act.
• The House Public Accounts Committee will seek a legal opinion from the Attorney-General of the Federation to resolve the conflicting interpretations.
• The AGF's advice will determine if NRS must refund the N123.48 billion or if the deductions were lawfully made.

For legal professionals advising clients on Education Tax compliance, especially those in the oil sector, closely monitoring the Attorney-General's forthcoming legal opinion is paramount.

The House of Representatives has intervened in a significant financial disagreement involving the Nigeria Revenue Service (NRS) and the Tertiary Education Trust Fund (TETFund), centered on N123.48 billion in deductions. This substantial sum represents costs of collection withheld from Education Tax revenues over a twelve-year period, specifically from 2012 to 2024. The legislative body's Public Accounts Committee, under the leadership of Bamidele Salam, representing Accord, Osun, has decided to solicit a formal legal opinion from the Attorney-General of the Federation (AGF) to resolve the matter.

The core of the dispute revolves around the legality of a four percent deduction applied by the NRS to Education Tax collected from companies operating in the oil sector. This controversy initially surfaced following an audit query issued by the Auditor-General for the Federation, which highlighted inconsistencies between the total Education Tax collected by the revenue agency and the amounts subsequently remitted to TETFund. The committee's hearing revealed starkly differing interpretations of the relevant statutory provisions by both agencies.

During the committee's proceedings, TETFund asserted that the NRS had imposed excessive charges. Dr. Gloria Olotu, the Director of Finance and Accounts for TETFund, articulated that the four percent provision for collection costs was intended solely for non-oil revenue streams and should not be extended to encompass the entirety of Education Tax gathered from both oil and non-oil enterprises. She explained that TETFund's internal review, prompted by the Auditor-General's query, indicated that the NRS had applied this charge indiscriminately across all Education Tax collections, failing to exclude the component derived from oil revenue.

Based on figures provided by the NRS itself, which delineated the oil and non-oil contributions to the collections, TETFund's calculations revealed that the cumulative excess deductions between 2012 and 2024 amounted precisely to N123,486,953,796.24. Dr. Olotu further disclosed that TETFund had repeatedly communicated with the revenue agency, seeking a refund and an amicable resolution to the disagreement, but these efforts had not yielded a positive response. Conversely, Shettima Tamadi, an Executive Director representing the NRS, firmly rejected the demand for a refund, maintaining that the deductions were fully compliant with existing legal frameworks, specifically citing Sections 15A and 69 of the NRS Act.

Mr. Tamadi elaborated on the NRS's position by explaining that Section 69 of the NRS Act defines non-oil revenue as all revenue sources apart from the proceeds generated from Petroleum Profits Tax (PPT). Consequently, he argued that Education Tax paid by oil companies does not fall under the category of Petroleum Profits Tax and is therefore legitimately subject to the four percent cost-of-collection charge. He clarified that oil companies remit PPT separately, and the NRS does not apply collection costs to those specific payments. Despite the NRS presenting what appeared to be a straightforward reading of the statutory provision, the House Public Accounts Committee concluded that the disagreement necessitated an authoritative legal interpretation to definitively settle the matter.

The committee members subsequently resolved to formally obtain the Attorney-General of the Federation's opinion to establish the correct interpretation of the law and ascertain whether the deductions were indeed made in accordance with legal requirements. It was also revealed that TETFund had previously sought legal advice from the Attorney-General on this very issue and committed to forwarding the AGF's response to the committee. However, the committee decided to proceed with its own independent request for the AGF's opinion before formulating a final stance. The hearing was then adjourned, pending the submission of requested written explanations from TETFund and the receipt of the pertinent legal advice.

The impending legal opinion from the Attorney-General of the Federation holds significant weight, as it will provide crucial clarity on the lawful application of collection costs to Education Tax, particularly for entities operating within the oil sector. This interpretation is expected to have a direct impact on the financial liabilities of companies subject to these deductions and could determine the validity of potential refund claims. The outcome will either affirm the NRS's current practices as lawful or necessitate a refund of the N123.48 billion to TETFund, thereby reshaping the financial landscape for both the revenue service and the education trust fund.

For legal professionals advising clients on Education Tax compliance, especially those in the oil sector, closely monitoring the Attorney-General's forthcoming legal opinion is paramount. This definitive interpretation will not only clarify the specific application of collection costs but also provide a clearer understanding of the statutory framework governing Education Tax collection and remittance in Nigeria. The resolution of this dispute will set a precedent for future interactions between revenue collection agencies and beneficiary funds, ensuring greater transparency and adherence to legal provisions in the management of public funds.

Lawyers advising clients on Education Tax compliance, particularly those in the oil sector, should closely monitor the Attorney-General of the Federation's forthcoming legal opinion. This interpretation will clarify the lawful application of collection costs to Education Tax, potentially impacting financial liabilities and refund claims for companies subject to these deductions.

Source: Original reporting via PUNCH Nigeria