A Federal High Court, Abuja, has held that the Finance Act, 2019, which became law on January 13, 2020, should not apply to trading activities conducted between January and December 2019 even if the returns reporting the activities were filed after January 13, 2020.

The decision was sequel to an action filed by Accugas Limited, which challenges the Federal Inland Revenue Services (FIRS) decision to apply the provision of the new Act on the firm.The Finance Act 2019 deleted section 33(3)(b) of the Companies Income Tax Act (CITA), which exempted a company with at least 25 per cent 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 insisted 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 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 judgment, trial judge, 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 judgment, Mr Tunde-Olowu (SAN) said: “In view of the recent yearly 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.”