The Supreme Court has affirmed an almost one-decade Court of Appeal judgment on $6,927,248 tax debt to Nigeria by an oil service firm, Halliburton West Africa Limited (HWAL).
The $6.9 million is an additional assessment by the Federal Inland Revenue Service (FIRS) on HWAL’s revenue for 1996, 1997, 1998, and 1999.
However, the firm challenged the sum, arguing that since its Nigerian subsidiary (Halliburton Energy Services Nigeria Limited (HESNL) had been previously assessed, asking it to pay the additional sum amounted to double taxation.
But, a five-member panel of the Supreme Court held on Friday that the appeal filed by HWAL lacked merit.
It consequently threw out the matter and directed the firm to pay the $6.9 million and N2 million as cost to FIRS.
In the lead judgment, Justice Emmanuel Agim found that HWAL failed to prove its claim that its Nigerian subsidiary had previously been assessed.
Justice Agim stated that HWAL and its subsidiary in Nigeria are different taxable entities. He added that there was clear evidence, particularly exhibit F, that Halliburton’s subsidiary was not assessed in the revenue in question.
“On the whole, this appeal fails. It lacks merit. It is accordingly dismissed. The appellant shall pay a cost of N2 million to the respondent,” he said.
The dispute arose when the FIRS, in 2002 made the new assessment of $6,927,248 for the tax years of 1996, 1997, 1998, and 1999. But Halliburton challenged it before the Body of Appeal Commissioners (BAC).
The BAC, in its decision, held in favour of FIRS. But 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. It also asked the court to direct FIRS to refund it $6,9 million with interest.
The additional assessment arose from contract transactions between HWAL, a foreign or non-resident company incorporated in Cayman Islands, and its affiliate, HESNL.
It was agreed between HWAL and HESNL that the former would obtain contracts from third parties in Nigeria for execution by the latter, with billing for the contracts made in dollars.
It was the income in dollars derived by the HWAL from the services rendered by HESNL to third parties that the FIRS taxed additionally in 2002 to the tune of $6,9 million for the years 1996 — 1999.
As part of its decision, BAC held that the said revenue was taxable. BAC described it as a recharge and ordered HWAL to pay the assessed amount to FIRS.
Although HWAL complied with the order made by the BAC, it challenged the decision before the Federal High Court in Lagos, which ruled in its favour.
The Federal High Court was not only of the view that the additional tax amounted to double taxation, it set aside the decision of the BAC and ordered FIRS to refund the $6,9 million to the respondent.
But the appellate court, in its December 2, 2014 judgment set aside the decision of the court and affirmed the judgment of the BAC, a decision HWAL challenged before the Supreme Court.
