Supreme Court Upholds Halliburton’s $6.9M Tax Debt to Nigerian Government
The Supreme Court has upheld a nearly decade-old Court of Appeal ruling affirming Halliburton West Africa Limited’s (HWAL) $6,927,248 tax debt to the Federal Inland Revenue Service (FIRS).
The debt arose from an additional tax assessment made in 2002 on HWAL’s revenue for the years 1996 to 1999. HWAL contested the assessment, arguing that its Nigerian subsidiary, Halliburton Energy Services Nigeria Limited (HESNL), had already been taxed for the same period, and paying the additional sum would constitute double taxation.
However, in a unanimous decision delivered on Friday, a five-member panel of the Supreme Court dismissed HWAL’s appeal, declaring it lacked merit. The court also ordered the company to pay N2 million in legal costs to the FIRS.
In the lead judgment, Justice Emmanuel Agim stated that HWAL failed to prove its claim that its Nigerian subsidiary had already been assessed for the revenue in question. He emphasized that HWAL and HESNL are distinct taxable entities and that evidence presented, particularly exhibit F, showed HESNL had not been taxed on the disputed income.
“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,” Justice Agim ruled.
The dispute originated when FIRS assessed HWAL’s revenue derived from contracts executed by HESNL for third parties in Nigeria, billing them in dollars. FIRS described the income as taxable and issued an additional tax bill of $6.9 million in 2002.
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HWAL initially challenged the assessment before the Body of Appeal Commissioners (BAC), which ruled in favor of FIRS, describing the revenue as a taxable “recharge” and ordering HWAL to pay the amount. HWAL complied but took the matter to the Federal High Court in Lagos, which ruled in its favor, describing the additional tax as double taxation and ordering FIRS to refund the amount.
The Court of Appeal, however, overturned the Federal High Court’s decision on December 2, 2014, affirming the BAC’s judgment. HWAL then escalated the matter to the Supreme Court, which has now dismissed the appeal, bringing the long-standing tax dispute to an end.
