Supreme Court Upholds $6.9 Million Tax Debt Ruling Against Halliburton

The Supreme Court has upheld a nearly decade-long ruling by the Court of Appeal, confirming that Halliburton West Africa Limited (HWAL) owes Nigeria an additional $6,927,248 in tax for the years 1996 to 1999. The decision marks the end of the firm’s challenge against a tax assessment imposed by the Federal Inland Revenue Service (FIRS) on its revenue during those years.

The oil service company had argued that since its Nigerian subsidiary, Halliburton Energy Services Nigeria Limited (HESNL), had already been assessed, charging HWAL for the same tax amounted to double taxation. However, a five-member panel of the Supreme Court, led by Justice Emmanuel Agim, rejected this argument, ruling that the appeal lacked merit. The court directed HWAL to pay the $6.9 million tax debt, along with N2 million in costs to FIRS.

In delivering the lead judgment, Justice Agim explained that HWAL and its Nigerian subsidiary were distinct taxable entities. He also noted that there was clear evidence, particularly in Exhibit F, proving that HESNL had not been assessed for the same revenue in question. “On the whole, this appeal fails. It lacks merit. It is accordingly dismissed,” he stated.

The dispute dates back to 2002 when FIRS assessed HWAL a $6.9 million tax liability based on its contract transactions with its Nigerian subsidiary. Under an agreement, HWAL obtained contracts in Nigeria, which were executed by HESNL, with the billing done in dollars. The revenue derived from these contracts was the subject of the additional tax assessment.

Initially, the Body of Appeal Commissioners (BAC) sided with the FIRS, ruling that the revenue in question was taxable. Despite this, HWAL appealed to the Federal High Court, arguing that the assessment amounted to double taxation. The court ruled in HWAL’s favor, but the FIRS appealed the decision, and in December 2014, the Court of Appeal reversed the lower court’s ruling, affirming BAC’s decision.

With the Supreme Court’s final judgment, the matter appears settled, with HWAL ordered to pay the full tax debt and associated costs. The long-running case highlights the complexities of tax disputes involving multinational companies operating in Nigeria.