TAT Rules On Allowable Expenses - Bad Debts And Public Relations Expenses

The Tax Appeal Tribunal (TAT or "the Tribunal") Lagos Zone has ruled, in NPF Microfinance Bank PLC (NPF or "the Company" or "the Appellant") and Federal Inland Revenue Service (FIRS or "the Respondent"), that bad debts (which have been proven to be bad) are allowable for tax deductions and are not subject to the discretion of the FIRS' Board while disallowing unsubstantiated Public Relations (PR) Expense.

Background of the Case

NPF, a financial services institution offering banking products and services to both serving and retired members of the Nigerian Police Force as well as the general public, had classified bad debts, overdraft facilities and PR expenses as allowable expenses for Companies Income Tax (CIT) purposes. This decision was based on Section 24 of the CIT Act Cap C21 LFN 2004 (as amended) (CITA).