Tragfigura Beheer: disputes FIRS tax claims

Nigeria’s Tax Appeal Tribunal  will begin hearing the appeal by a Swiss-based oil company, Trafigura Beheer B.V over a N127 billion tax demand from the Federal Inland Revenue Service.

Trafigura claims that because it is not registered in Nigeria, it  cannot file tax returns to FIRS.

The company stated this in its appeal challenging the demand for payment of outstanding tax liabilities dated Feb. 24, 2014 served on it by FIRS covering years 2010 to 2014.

Trafigura an oil company was engaged in oil business transactions with Pipelines and products marketing Company limited (PPMC).

In a copy of the appeal,  the company alleged that it was not based in Nigeria, therefore, should not be liable to tax.

“The crude Oil Refined Products Exchange Agreements between the company and PPMC was for the exchange of crude oil free on board (FOB) delivered.

“And cleared for export at designated Nigerian port for refined product delivered CIF by the company with transfer of title passed upon delivery to or from the vessels.’’

The company alleged that this was not a permanent structure that would constitute a fixed base of business in Nigeria under the Companies Income Tax Act (CITA).

The appellant also alleged that FIRS misapplied the Companies Income Tax Act (CITA) when it found that the appellant cleared for exports from Nigeria.

“The appellant does not qualify under Nigerian law to file tax returns as it is not a Nigerian company and does not have a fixed base of business in Nigeria.’’

It also claimed that “under Nigerian law, the appellant is not a company to which a deemed income approach can be applied’’.

According to the company, the company does not derive any profit in Nigeria that will result in an obligation to file corresponding tax returns.

However, the FIRS stated in its letter that `Trafigura is engaged in oil business transactions with PPMC on regular basis and therefore liable to tax in Nigeria.

“The company is yet to file tax returns with FIRS

“Since the company’s financial statements were not available, deemed income approach has been used to arrive at tax liabilities of the company.

“Deemed tax rate of 6 per cent applied on the value of crude products which is 20 per cent deemed profit at 30 per cent tax rate.