COURTROOM NEWS 3 days ago
Supreme Court Affirms Halliburton’s $6.9m Tax Debt to Nigeria
The Supreme Court has affirmed the December 2, 2014 judgment by the Court of Appeal in Lagos upholding the additional assessment of US$6,927,248 made by the the Federal Board of Inland Revenue Service (FBIRS) on the revenue of Harlliburton West Africa Limited (HWAL) for the tax years of 1996, 1997, 1998 and 1999.
In a judgment on Friday, a five-member panel of the apex court held that the appeal filed by HWAL, marked: SC/CV/311/2014 was without merit.
In the lead judgment, Justice Emmanuel Agim found that HWAL failed to prove its assumption that its subsidiary in Nigeria had already been assessed on the same revenue and that asking it to pay the $6.9million amounted to double taxation.
Justice Agim noted that both HWAL and its subsidiary in Nigeria are taxable entities, adding that there wre clear evidence, particularly exhibit F, that there was no assessment of Halliburton’s subsidiary in the revenue in question.
“On the whole, this appeal fails. It lacks merit. It is accordingly dismissed. The appellant shall pay cost of of N2million to the respondent,” Justice Agim said.
CA/L/320/09
The dispute arose when the FIRS, in 2002, made additional assessment of US$6,927,248 for the tax years of 1996, 1997, 1998 and 1999 on Harlliburton, which it challenged before the Body of Appeal Commissioners (BAC).
The BAC, in its decision, held in favour of FBIRS, a decision HWAL appealed before the Federal High Court in Lagos.
HWAL prayed the court to set aside the BAC’s decision by declaring the said additional assessment invalid and directing the FBIRS to refund to it the US$6,927,248 with interest.
The additional assessment arose from contract transactions between HWAL, a foreign or non-resident company incorporated in Cayman Islands, and its affiliate operating in Nigeria – Halliburton Energy Services Nigeria Limited (HESNL).
It was agreed between HWAL and HESNL that HWAL would obtain contracts from third parties in Nigeria for execution by HESNL, with billing for the contracts made in United States of America dollars.
It was the income in US dollars derived by the HWAL from the services rendered by HESNL to third parties that the FBIRS taxed additionally in 2002 to the tune of US$6,972,248 for the years of 1996 — 1999, a decision HWAL before the BAC and lost.
As part of its decision, the BAC held that the said revenue was taxable, described it as recharges and ordered the HWAL to pay the assessed amount to $6.9m to FBIRS forthwith.
Although HWAL complied with the order made by the BAC, it challenged the decision before the Federal High Court in Lagos, ehich held in its favour
The Federal High Court was of the view that the additional tax amounted to double taxation and set aside the decision of the BAC and ordered FBIRS to refund to the respondent the additional tax of US$6,972,248 to HWAL.
On appeal to the Court of Appeal, the appellate court, in its judgment on December 2, 2014 faulted the decision of the Federal High Court, set it aside and affirmed the judgment of the BAC, a decision HWAL challenged before the Supreme Court, which was affirmed on Friday.
