Supreme court affirms Halliburton’s $6.9m tax debt to Nigeria

The supreme court has affirmed a $6,927,248 debt owed by Halliburton West Africa Limited (HWAL) to the federal government.

The dispute began in 2002, when the Federal Board of Inland Revenue Service (FBIRS) issued an additional tax assessment of $6,927,248 for 1996-1999 on HWAL, a Cayman Islands-incorporated non-resident company.

The assessment was based on revenue earned from contracts secured by HWAL for execution by its Nigerian subsidiary, Halliburton Energy Services Nigeria Limited (HESNL), with billing done in dollars.

HWAL initially contested the assessment before the Body of Appeal Commissioners (BAC), which upheld the FBIRS’s position, describing the revenue as “recharges” and ordering HWAL to pay the assessed amount.

HWAL complied but later approached the federal high court in Lagos, arguing that the assessment amounted to double taxation. The court ruled in HWAL’s favour, set aside the BAC’s decision, and ordered FBIRS to refund the additional tax.

On appeal by FBIRS, the court of appeal on December 2, reversed the federal high court’s decision, affirming the BAC’s judgment and validating the additional assessment.

Dissatisfied, HWAL proceeded to the supreme court.

Delivering judgment on Friday, a five-member panel of the apex court dismissed HWAL’s appeal, marked SC/CV/311/2014, as lacking merit.

In the lead, Emmanuel Agim, one of the justices, held that HWAL failed to substantiate its claim that its Nigerian subsidiary had already been taxed on the same revenue and that the $6.9 million assessment amounted to double taxation.

The court said it found clear evidence, including Exhibit F, that no such assessment was made on Halliburton Energy Services Nigeria Limited (HESNL), HWAL’s subsidiary.

“On the whole, this appeal fails. It lacks merit. It is accordingly dismissed,” Agim said.

He added that the appellant shall pay cost of N2million to the respondent.