A Court of Appeal sitting in Lagos has upheld an additional $6.97 million (about N1.24 billion) tax assessment against Halliburton Energy Services Nigeria Limited (HESNL) in favour of the Federal Inland Revenue Service (FIRS).
FIRS had raised an additional tax assessment against HESNL for year 1996 to 1999.
The additional assessment arose from contract transactions between Halliburton West African Limited—a foreign/non-resident company incorporated in Cayman Islands- and its affiliate operating in Nigeria, under the Halliburton Energy Services Nigeria Limited (HESNL).
The two companies agreed that Halliburton would obtain contracts from third parties in Nigeria for execution by HESNL with billing for contracts made in United States of America dollars.
FIRS taxed additional income-in US dollars- derived by Halliburton West African Limited to the tune of $6, 972.248 million for the years 1996-1999.
Displeased with the FIRS decision, Halliburton filed a complaint at the defunct Body of Appeal Commissioners.
The body upheld FIRS decision. Dissatisfied with the outcome at the body, HESNL approached the Federal High Court, which quashed the body’s decision and ordered FIRS to refund the said amount to Halliburton.
FIRS headed to the Court of Appeal to challenge the order of the High Court and the appellant court in Abujaits unanimous decision of three justices, ruled that the service was empowered by the law to assess the income not disclosed earlier.
The Body of Appeal Commissioners assented to FIRS additional assessment. A Federal High court, however, voided the assessment, compelling the FIRS to head for the appeal court.
Citing Section 26 of CITA (Companies Income Tax Act, NDIC v Okem Entreprises Ltd, Oskue V FCE Asaba (2010) 10 NWLR (pt 1201) Page 1, Kotoye V Saraki (1991$ 7-8 SCNJ 524 and other decided cases, Justice Joseph Shagbaor Ikyegh noted that a holistic construction of Section 26 of CITA entitles the appellant (FIRS) “to assess to tax, the income of the respondent (Haliburton West Africa), by way of additional assessment to tax of a taxpayer.
