By Tony Ochela
Supreme Court yesterday dismissed an appeal filed by Halliburton West Africa Limited, HWAL, challenging a $6.9 million tax debt it was mandated to pay to the federal government in 2002.
The apex court in an unanimous decision by a five-member panel of justices affirmed the December 2, 2014 judgement by the Court of Appeal in Lagos, which directed the company to pay the sum, being an additional assessment of its revenue for four years.
The Federal Inland Revenue Service, FIRS, had in 2002 assessed Halliburton’s revenue from 1996 to 1999 and insisted that it was indebted to the federal government to the tune of $6,927,248.
After HWAL initially took the issue before the Body of Appeal Commissioners, BAC, and lost the case, it took the matter to the Federal High Court in Lagos.
The company, among other requests, urged the court to set aside BAC’s decision by invalidating the said additional tax assessment.
It equally prayed the court to direct
FIRS to refund to it, $6,927,248 additional tax it paid, with interest.
However, in the processes it filed before the court, FIRS explained that the additional assessment arose from contract transactions between HWAL which is a foreign company incorporated in the Cayman Islands, and its affiliate in Nigeria – Halliburton Energy Services Nigeria Limited, HESNL.
It noted that the two companies agreed that HWAL would obtain contracts from third parties in Nigeria, which would be executed by HESNL, with billing for the contracts made in the United States of America dollars.
FIRS told the court that it was the income that accrued to HWAL from services that HESNL rendered to third parties within the four years that amounted to the additional tax it assessed in 2002.
BAC had in its verdict that precipitated the court case, held that the said revenue that accrued to HWAL, which it described as recharges, were taxable incomes.
It, therefore, ordered HWAL to pay the accumulated tax to the FIRS.
Even though HWAL complied with the order, it proceeded to the high court where it got a favourable judgement.
Thw high court ruled that the additional tax that was assessed by FIRS amounted to double taxation.
Aside from setting aside the decision of BAC, the court ordered FIRS to refund the additional tax of $6,972,248 to HWAL.
Meanwhile, not satisfied with the verdict, FIRS took the matter before the Court of Appeal in Lagos, which in a judgement it delivered in 2014, vacated the decision of the high court and affirmed the earlier position of BAC.
While upholding the position of the appellate court, the Supreme Court, in a judgement it delivered last Friday, held 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 $6.9 million amounts to double taxation.
In the lead judgement delivered by Justice Emmanuel Agim, the apex court held that HWAL and its subsidiary in Nigeria were taxable entities.
Justice Agim maintained that there was clear evidence, particularly exhibit F, to establish that there was no assessment of Halliburton’s subsidiary in the revenue in question.
It further awarded a cost of N2million against the appellant.
