Supreme Court Upholds $6.9M Tax Debt Against Halliburton West Africa
In a decisive ruling that brings a decades-long legal battle to a close, the Supreme Court of Nigeria has affirmed that Halliburton West Africa Limited (HWAL) must pay a staggering $6,927,248 in unpaid taxes to the federal government. The judgment, delivered on Friday, marks the end of a contentious dispute that began over two decades ago and underscores the government’s resolve to enforce tax compliance, particularly in cases involving multinational corporations.
The case traces back to 2002 when the Federal Board of Inland Revenue Service (FBIRS) issued an additional tax assessment of $6.9 million against HWAL, a Cayman Islands-incorporated non-resident company. The assessment covered the tax years 1996 to 1999 and was based on revenue generated from contracts secured by HWAL but executed by its Nigerian subsidiary, Halliburton Energy Services Nigeria Limited (HESNL). Notably, the contracts were billed in U.S. dollars, raising questions about tax jurisdiction and liability.
HWAL contested the assessment, arguing that the revenue in question was merely “recharges” to its Nigerian subsidiary and should not be subject to additional taxation. However, the Body of Appeal Commissioners (BAC) sided with the FBIRS, upholding the assessment and ordering HWAL to pay the $6.9 million. HWAL complied but later challenged the decision in court, claiming that the assessment amounted to double taxation since its subsidiary, HESNL, had already been taxed on the same revenue.
The case took a dramatic turn when the Federal High Court in Lagos ruled in HWAL’s favour, overturning the BAC’s decision and ordering the FBIRS to refund the additional tax. The court agreed with HWAL’s argument that the assessment constituted double taxation, a decision that was celebrated as a victory for the company.
However, the FBIRS appealed the ruling, and on December 2, the Court of Appeal reversed the Federal High Court’s decision, reinstating the BAC’s judgment and validating the $6.9 million assessment. Undeterred, HWAL took its case to the Supreme Court, hoping for a final resolution in its favour.
In a unanimous decision delivered by a five-member panel of the apex court, HWAL’s appeal was dismissed for lacking merit. Justice Emmanuel Agim, who delivered the lead judgment, emphasized that HWAL failed to provide sufficient evidence to support its claim of double taxation. The court found no proof that HESNL, HWAL’s Nigerian subsidiary, had been taxed on the same revenue, as HWAL had alleged.
“On the whole, this appeal fails. It lacks merit. It is accordingly dismissed,” Justice Agim declared. He further ordered HWAL to pay N2 million in costs to the FBIRS, cementing the government’s victory in the long-standing case.
The Supreme Court’s decision is a significant win for the Nigerian government, particularly in its efforts to ensure tax compliance among multinational corporations operating in the country. The ruling sends a clear message that foreign entities cannot evade their tax obligations by shifting revenue through subsidiaries or claiming double taxation without concrete evidence.
For HWAL, the judgment marks the end of a protracted legal battle and underscores the importance of adhering to local tax laws. The $6.9 million debt, now firmly upheld by the highest court in the land, must be settled, bringing closure to a case that has lingered for over 20 years.
