Tribunal orders oil company to pay $1.7m tax to Federal Inland Revenue Service.

THE Tax Appeal Tribunal (TAT), South-South zone, has ordered a multi-national oil company, Global Marine Baltic Incorporation, to pay the sum of $1,770,995 (N279.8 million) tax to the Federal Inland Revenue Service (FIRS).

In a judgment read by the chairman of the three-man panel, Mr Adenike Eyoma, the tribunal held that the sum represented the firm’s company income tax liability for 1997, 1998 and 2000, respectively.
Global Marine Baltic Incorporation, had filed the suit following the additional tax assessment served on it by the FIRS on March 11, 2005, in respect of one of its subsidiaries, Global Marine Offshore Drilling Limited.

The company, through its counsel, Mr Festus Onyia, had asked the tribunal for a declaration that recharges in respect of its subsidiary do not form part of its revenue derived from Nigeria for the purposes of taxation under Section 26 of the Company Income Tax Assessment (CITA).
Onyia had further asked for a “declaration that the inclusion of the recharges as part of the taxable revenue/profit of the appellant derived from Nigeria amounts to double taxation and therefore unjust, null and void.”

Also, he urged the tribunal to set aside the FIRS notices of additional assessment dated January 27, 2004 , on the grounds that its associate company, which they had engaged to provide logistic services in the execution of their Nigerian contracts,  had already paid company tax on the same recharges.
However, FIRS through its counsel, Mr Daniel Onukun, had asked the tribunal to dismiss the appeal and order the company to pay its tax liability together with penalty and interest thereon as provided by the law.

Onukun had said the term “recharges” was alien to the Nigerian Tax system, which merely referred to reimbursable or payments by the appellant, of cost incurred on their behalf and a mark up, to their company in Nigeria.
The tribunal in its judgment,  held that the additional assessment notices for the years under dispute were valid and made in accordance with the law, adding that they did not amount to double taxation as being claimed by the company.

“We note that taxation of parts of an enterprise’s turnover more than once, frequently occurs in various guises, yet all tax regimes accept it just as the Nigerian Tax system does.
“Taxation of payments made by the appellant to their subcontractor can rightly be subjected to tax in the hand of the subcontractor who for all purposes in this case is not different from other employees of the appellant.”

The Tribunal further held that by not filing its tax returns in accordance with the provisions of Section 55 of CITA, Global Marine Baltic Incorporation had brought itself squarely with the provisions of Section 30 of CITA, namely, assessment to tax based on turnover basis.
“In this situation, it is the FIRS that is empowered by law to define what amounts to a fair and reasonable percentage of a turn over liable to tax.

“For the foregoing reasons and having regard to all the circumstances of this case, this appeal cannot succeed,” the tribunal chairman said.(Source, Nigerian Tribune)