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Nigeria: Tax authority has discretion to determine percentage of tax on turnover of foreign companies

Federal High Court decision

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October 8, 2024

The Federal High Court (FHC) in Lagos held that the tax laws do not require the Federal Inland Revenue Service (FIRS) to justify the imposition of any particular percentage of tax on a foreign company’s turnover.

The court relied on Section 30 of the Companies Income Tax Act, which grants FIRS the discretion to assess a foreign company to tax on a fair and reasonable percentage of their turnover when it appears that such company has no assessable profit, the assessable profits are less than expected, or the profits of the companies cannot be ascertained. The court held that FIRS must have acted fairly and reasonably when it opted to tax 20% of the taxpayer’s turnover.

The case is: BJ Pumping Services SA Panama v. FIRS

Read an October 2024 report prepared by the KPMG member firm in Nigeria

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