The judgment of the Supreme Court, penultimate week, has put to rest the dispute between the Federal Board of Internal Revenue Services (FBIRS) and a foreign registered entity, Halliburton West Africa Limited (HWAL), whose affiliate in Nigeria, is Halliburton Energy Service Nigeria Limited (HESNL). In the lead judgment, Justice Emmanuel Agim, upheld the judgment of the Court of Appeal, and affirmed that there is no evidence to show that HESNL had been taxed on the same income before.

The HWAL had approached the Body of Appeal Commissioners (BAC) in 2002, after the FBIRS made an additional assessment of US$6,927,248 for the tax years of 1996, 1997, 1998 and 1999 on HWAL, which it challenged as double taxation. HWAL lost at the BAC, but her appeal at the Federal High Court was successful. The FBIRS appealed to the Court of Appeal, which upturned the judgment of the Federal High Court. HWAL further appealed to the Supreme Court, which delivered her judgment penultimate Friday.

The five-member panel of the apex court dismissed the appeal marked SC/CV/311/2014 as lacking in merit and awarded a cost of N2 million in favour of FBIRS. Of note, the judgment of the Court of Appeal was delivered on December 2, 2014.

From 2002 when the dispute arose, to the final judgment, the matter had dragged for more than 20 years, which we consider too long for a commercial dispute. We hope with the appointment of full number of Supreme Court justices, matters will be dealt with more expeditiously.

Coming on the heels of the tax reform bills presently before the National Assembly, we hope the FBIRS will be buoyed to effectively and efficiently exercise the responsibilities of its office. It is sad that foreign registered companies and even those with local affiliates, that diligently pay taxes in their home country treat Nigeria as if it is a tax haven. What they dare not do in their home country, they seek to do in Nigeria, with our lax tax laws and slow judicial system.

We hope the tax reform bills will take care of the challenges posed by foreign companies which use all manner of subterfuge like offshore intermediate firms, royalties, technical fees, understated profits and fake import invoices, to reap Nigeria of the monies due to her, as tax. Some of these foreign-based companies also rip

Nigeria off with phantom home fees for bloated staff and equipment, which are not needed for the services they render. Sadly, Nigerian directors who are supposed to protect Nigeria’s interest in the companies sometimes collude with the foreign directors.

Again, corruption and inefficiency in the FBIRS contribute to the enormous losses in tax collection in the country, and efforts must also be made to curb it. The new leadership at the FBIRS must ensure that tax collection is embedded in technology that is tamper proof. If the collection processes are technology driven, with a robust backbone, the incidence of FBIRS officials creaming off taxes due to the country would be a thing of the past. The body can also have an internal ombudsman to ensure efficiency and discipline amongst employees.

The gray areas in our current tax laws that gave rise to the dispute which the Supreme Court resolved, should be captured explicitly in the new tax laws. We commend the Federal Government for coming up with a robust review of our old tax laws. Luckily, those who were initially opposed to the tax laws have keyed into it.

Going forward, every effort should be made to ensure that efficient and equitable tax laws that are attuned to international best practices is applicable in Nigeria. Tax liabilities should be clear and unequivocal so that prolonged court cases will be unattractive over tax disputes. (The Nation Editorial)