Tax Tribunal Upholds N2bn Tax Assessment Against Cement Technology Institute
The Tax Appeal Tribunal (TAT), Abuja Zone, has ordered the Cement Technology Institute of Nigeria (CTIN) to remit approximately N2.03 billion in Companies Income Tax (CIT) and Tertiary Education Tax (TET). This significant ruling stems from a dispute over tax assessments levied by the Nigeria Revenue Service (NRS), formerly the Federal Inland Revenue Service (FIRS).
The five-member tribunal panel, presided over by Chief Moremi Soyinka-Onijala, delivered its judgment in appeal designated TAT/ABJ/332/2023. CTIN had challenged additional assessment and demand notices concerning CIT, Education Tax, and Withholding Tax for various assessment and accounting periods, as well as a notice of refusal to amend these assessments.
At the heart of the dispute was CTIN’s contention that the assessment of CIT and Education Tax on interest income derived from its Treasury Bills, bonds, and fixed-deposit placements was unlawful. The institute also challenged the legality of Withholding Tax assessed on management fees paid to the Bank of Industry.
In its comprehensive judgment, the tribunal meticulously examined four key issues: whether CTIN’s activities constituted trade or business, the distinction between income and taxable profit, the applicability of the Companies Income Tax (Exemption of Bonds and Short-Term Government Securities) Order, 2011, and the specifics of Education Tax and Withholding Tax.
The tribunal affirmed that the management fees paid by CTIN to the Bank of Industry should be recognised as a deductible expense. This deduction is to be applied against interest income when calculating revised assessable and total profits. Furthermore, the tribunal clarified that under the Companies Income Tax Act, the Bank of Industry was obligated to deduct Withholding Tax at the prescribed 10 per cent rate at source from the relevant interest income and remit it to the tax authority. The ruling confirmed that appropriate credit had been granted for this Withholding Tax in determining CTIN’s final CIT liability.
Consequently, the tribunal computed the Companies Income Tax payable by CTIN at N1,835,484,959.69 and the Tertiary Education Tax at N190,158,410.44, bringing the total assessment to N2,025,643,370.13. The appeal was largely dismissed, with the tribunal directing the NRS to recompute the assessment within 30 days to fully implement the exemption of interest income specifically attributable to Federal Government Treasury Bills and Bonds, as stipulated by the Companies Income Tax (Exemption of Bonds and Short-Term Government Securities) Order, 2011. This decision underscores the critical importance of precise tax compliance and the nuanced application of tax exemptions for financial instruments.
