Nigerian court clarifies rules on foreign company taxation

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January 2016


The Nigerian Federal High Court, in a decision issued September 18, 2015, has clarified the tax rules for foreign companies operating through a fixed base or permanent establishment (PE) in Nigeria (JGC Corporation v. Federal Inland Revenue Service). The Nigerian Federal Inland Revenue Service (FIRS) had ruled that business profits of some foreign companies are derived from, and therefore taxable in, Nigeria, even if the foreign company did not have a fixed base in Nigeria. The FIRS concluded that a fixed base existed in certain other instances, and taxed all of the foreign company’s profits from the executed contracts, rather than only the profits attributable to the fixed base.

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