Overview of CITN Statement of Taxation Standards (STSs)- part 2

Overview of CITN Statement of Taxation Standards (STSs)
October 14, 2021
Overview of CITN Statement of Taxation Standards (STS) 3 – Procedural Aspects of Filing Returns
November 6, 2021


The CITN Statement of Taxation Standards (STS) Two on Tax Returns Position was issued and gazetted in the Federal Republic of Nigeria Official Gazette Vol. 100 of June, 2013. The standard which became effective from 1st January, 2013 addresses members’ obligations when recommending tax return positions or preparing or signing tax returns to be filed with any tax authority in Nigeria. In general, the standard provide that a member of the Institute should not recommend a tax return position or take a position on a tax return that the member prepares unless that position satisfies applicable reporting and disclosure standards.

The standard is divided into five sections:
Part 1 (One)- The introduction
Part 2 (Two)- Explanatory Notes
Part 3 (Three)- The Standards
Part 4 (Four) – Compliance
Part 5 (Five) – Effective Date

Parts 1, 2 and 3 present the standards, Part 4 talks about complying with the relevant tax laws, whilst Part 5 talks about the effective date, which is 1st January, 2013.

Guidance on STS Two
a. The self-assessment tax system can function effectively only if taxpayers file tax returns that are true, correct and complete. A tax return is primarily a taxpayer’s representation of facts, and the taxpayer has the final responsibility for positions taken on the return. In addition to a duty to the taxpayer, a member has a duty to the tax system. However, it is well established that the taxpayer has no obligation to pay more taxes than are legally owed, and a member has a duty to the taxpayer to assist in achieving that aim.

b. A member should be satisfied as a matter of professional judgment that the filing position is supported and defendable with facts and figures. In determining whether a realistic possibility exists, a member should do all of the following:
i. Establish relevant background facts
ii. Extract the appropriate questions from those facts
iii. Seek for authoritative answers to those questions
iv. Resolve the questions by weighing the authorities uncovered by that search
v. Arrive at a conclusion supported by the authorities.

c. For purposes of this Standard, preparation of a tax return includes giving advice in writing on events that have occurred at the time the advice is given, if the advice is directly relevant to determining the existence, character, or amount of a schedule, entry, or other portion of a tax return.

d. A member should not recommend to a client a tax position that is not backed by facts and figures.

e. A member should not prepare or sign a return that is not supported by law. Notwithstanding the foregoing standards on tax return position, a member may recommend and/or prepare or sign a tax return position that the member concludes is not false as long as the member advises the taxpayer appropriately.

f. When recommending or signing a return and the member observes a potential penalty, the taxpayer should be duly advised.

g. A member should not recommend a tax return position or prepare or sign a return reflecting a position that the member knows exploits the audit selection process of a tax authority and serves as mere arguing position advanced solely to obtain leverage in the bargaining process of settlement negotiation with a tax authority.

h. When recommending a tax return position, a member has both the right and responsibility to be an advocate for the taxpayer with respect to any position satisfying the aforementioned standards.

The Standard recommends that in some instances, a member can satisfy the reporting and disclosure requirements of the applicable taxing authority only if the particular tax position at issue is appropriately disclosed. The extant laws and regulations should be consistently applied to ensure that pertinent disclosure provisions are satisfied. Members of the Institute should consider all the facts and circumstances in evaluating whether a position is appropriately disclosed.

Members and stakeholders are invited to visit https://app.citn.org/home/tpgs to download the CITN Statement of Taxation Standards 1-9.

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