Tribunal orders Mobil to pay $83.4m education tax to FIRS

The Tax Appeal Tribunal, Lagos Zone, on Friday ordered Mobil Producing Nigeria Unlimited to pay $83.4 million (N13 billion) education tax to the Federal Inland Revenue Service.
The tribunal gave the order while delivering judgment on an appeal
filed by the oil company against the FIRS.
The Chairman of the five-man tribunal, Kayode Sofola (SAN), said the
amount represented the company’s education tax liability for 2008.
The company had instituted the appeal on May 5, 2011 when FIRS issued
with it an education tax liability of $83.4 million for 2008.
The appellant’s counsel, T. Emuwa, had claimed that the assessment
breached an agreement signed by the company with the Federal
Government of Nigeria and the Nigerian National Petroleum Corporation.
Emuwa said the Memorandum of Understanding was first signed in 1986
and renewed in 2000.
He said the 2000 MoU allowed the company to deduct all amounts paid to other agencies from the tax due to the federal and state governments FIRS had through its counsel, B.H. Oniyangi, claimed that the 2000 MoU was signed for a three-year term, adding that its validity ended on January 1, 2003.
Oniyangi held that the Federal Government, through a letter issued by
the Department of Petroleum Resources on January 17, 2008, also
confirmed that the MoU had lapsed.
According to her, the 2000 MoU was replaced by the Petroleum Profits
Tax Act, which was used to issue the disputed assessment.
Delivering the judgment, Sofola agreed that the said MoU was only for
a three-year term, noting that there was no evidence before the panel
that it was renewed.
He said: “The 2000 MoU thus expired at the end of 2002.
“The parties never did anything to keep it alive longer, as stated in
clause 7.1.
“In effect, clause 7.1 contains an option to renew, exercisable at the joint instance of all the parties.
“This option was never exercised and thus no renewal or extension was
triggered.”
Sofola said the appellant was no longer entitled to make deductions
allowed under the 2000 MoU, in calculating their education tax.
He said: “The PPTA is the legislation in force and cannot be
subordinated to the mere contemplations of the MoU.
“We uphold the respondent’s (FIRS) assessment of the appellant to
education tax of $83,414,793.
“We order the appellant to pay accordingly.”