The Tax Appeal Tribunal (TAT), sitting in Lagos on Friday ordered Halliburton Energy Services Nigeria Ltd. not to pay the sum of 167.7 million US dollars to the Federal Inland Revenue Service (FIRS) as tax from the 559 million US dollars the company was fined by the US authorities for bribing Nigerian officials in Jan. 2009.
Mr Kayode Sofola (SAN), chairman of the five-man tribunal, gave the order while delivering judgment in an appeal filed by Halliburton against the FIRS over the tax dispute.
The FIRS had on Feb. 24, 2009, sent an assessment to Halliburton asking it to pay the money, being 30 per cent of the total money involved in the global bribery scandal.
In imposing the tax on Halliburton Energy Services Nigeria Ltd, the FIRS had contended that the fine paid to the US authorities is a transaction which took place in Nigeria and therefore taxable.
The tribunal however held that the FIRS assessment breached the terms of settlement and non-prosecution agreement entered into by the Federal Government of Nigeria and Halliburton on Dec. 11, 2010.
Sofola said: “Clause 2(i) of the agreement provides that the FGN/ or any FGN authority, its agencies, officials and agents agrees that it will not file or seek to file any criminal charges, complaints , allegations , lawsuits (civil or otherwise), indictments, or causes of action of any kind against the Accused Persons or the Companies arising from or relation to the TSKJ Joint Venture, the liquefied natural gas plant on Bonny Island, Nigeria, or any of the facts or allegations asserted in the criminal charges pursuant to any Nigerian Law”.
He said the terms of agreement had exempted Halliburton USA Inc. and its subsidiaries from the imposition of the assessment by the FIRS.
The tribunal chairman said:“While foreign companies may be liable to the imposition of tax in Nigeria in appropriate cases Halliburton Inc. USA is not chargeable to tax in Nigeria with regard to the fine it paid to the American Government in the circumstances of the case”.
According to him, there is no evidence before the tribunal to determine the quantum of the bribe that was paid to the Nigerian officials.
He said: “The respondent speculates that the fine of 559 million US dollars or the entire bribe would have formed part of the expenses that was charged in the tax returns to FIRS.
“We find that the fine is not profit and to the contrary, is a loss. Thus the case of the respondent as presented before us is untenable.
“The said assessment is defective as being speculative contradiction and inconsistent with the relevant tax laws and the issues raised by the respondent is hereby set aside”.
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