FHC Delivers Landmark Decision on Retroactive Application of Finance Act 2019 by FIRS
The Abuja Division of the Federal High Court recently delivered a landmark decision, and held that the Finance Act 2019, which became law on 13 January, 2020, should not apply to trading activity conducted by Accugas Limited between January and December 2019, even if the returns reporting the trading activity were filed after 13 January, 2020.
The Finance Act 2019 deleted Section 33(3)(b) of the Companies Income Tax Act (CITA), which exempted a company with at least 25% imported equity capital from paying minimum tax. Accugas met this threshold, and wrote to FIRS to seek confirmation that notwithstanding the deletion of Section. 33(3)(b) of the CITA, it could claim in its returns, the minimum tax exemption in respect of trading activity conducted between January and December 2019. However, FIRS took the view that because the returns were filed in July 2020, after the Finance Act 2019 had become law, Accugas had lost its entitlement to the minimum tax exemption.
Dissatisfied by FIRS’ position, Accugas through its counsel, AELEX (led by Messrs Adedapo Tunde-Olowu, SAN and Theophilus Emuwa), filed an action at the Federal High Court, Abuja Division and argued that by virtue of Section 6(1)(b) and (c) of the Interpretation Act and the doctrine of vested rights, Accugas’ entitlement to the minimum tax exemption in respect of trading activity conducted between January and December 2019 subsists; notwithstanding that the returns reporting the trading activity were filed after the Finance Act 2019 had become law.
Delivering her judgement, Justice N.E. Maha upheld AELEX’s arguments, and ordered FIRS to refund any sum that Accugas had already paid as taxes, based on FIRS’ earlier assessment.
Reacting to the judgement, Mr Tunde-Olowu, SAN remarked that “in view of the recent annual amendments to Nigeria’s fiscal legislation, the decision of the Federal High Court is significant, as it provides taxpayers with certainty that, unless express language is used, any amendment to fiscal legislation will not be applied retroactively, regardless of the time of filing tax returns”.