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IF I WAS PRESIDENT by Chika Maduakolam

by Legalnaija | Jan 21, 2016 | Uncategorized

May 2015; the defining
moment of change for Nigeria. A new president sworn in, the president of the
people, the chosen one. The exhilaration that came with the fact that power now
lay in the hands of Nigerians to make or break a ruler!! Nigerians felt we had
a choice!

January 2016; a more sober
Nigeria. A Country faced with realities it never envisaged the full scope of.
As I am wont to do, I state clearly that I am no political pundit or analyst or
soothsayer. This piece is not an attack on Nigeria or its leaders. For those
familiar with my style of writing, it is a call for introspection. Today, I am
a mere citizen of Nigeria with a Law degree.

What is the Law? Simplest
definition: A system of rules to which every individual within a society is to
abide by or else face punishment or reprieve from the government or appropriate
enforcement institutions.

What
is a Society without Law: Chaotic, Demoralised, and Disorderly.

What
is a Society whose Government does not know the Law: Empty. Directionless.

When some of us
cast our votes in 2015, it wasn’t because we felt the Messiah had come but more
like the end of Pharaoh had come. We had reached our wits end. We did not see
the light at the end of the tunnel but we saw an opening with hope that if we
ventured, we may see a light at the end.

I will not say the
leadership so far has been dismal, there still exists peace in a majority of
the country. What I will say is that more is to be expected. The fight against
corruption, though commendable, cannot be the only defining moment of this
administration.

The leadership
cannot underestimate the value of taking the pulse of the people. This was a
strategy employed pre-campaign but has been discarded at the achievement of the
much sought position; that is not a wise move.

It is not a wise
move because, as much as the government is burdened with the responsibility of
making the laws, a large part of Law creation, execution and enforcement relies
on the People.

The missing part of
my earlier definition, I make bold to say is: The Law is the People, The Law is
made by the People and for the People.

We fail to
recognize the circle of life we live in- The president of today was once a boy
who came from a humble background. He was not ‘destined’ to rule but shaped by
the annals of society and guided by his path in life, he is the president of
today. So also every leader in Nigeria today. So the little boy who was raised
yesterday was raised with a set of values and, most importantly, an awareness
of what obtained in the land. Before I veer off course in my rant, what I
simply mean is a healthy understanding of the Law and a commitment to abide by
it will pay off dividends that are immeasurable in future.

Bringing it home,
if I am the Law, I will do all in my power to protect myself, to protect my
interests and those around me alike. I will have a consciousness that in the
position of a follower or a leader, my utmost goal is to uphold the law.

I will not, as a
leader, feel I have the utmost right to trump the decision of the judiciary as
I am not given that right by law (the detention of the former National Security
Adviser, Sambo Dasuki as well as the leader of the Indigenous People of Biafra). I will not desist from
following due process in the prosecution of my duties. I will not bring out
directives without full consideration of its effects on the citizens (Effects
of CBN directives on Nigerians in Diaspora).

This is the basis
upon which every Nigerian should never take for granted the value of knowing
the Laws of the Land for himself/herself and the generations to come.

We cannot continue
to tow the path of ‘anything goes’ in this great country. ‘Anything’ does not
go; the 1999 Constitution of the Federal Republic of Nigeria is for EVERY
Nigerian, not for only the educated, or the wealthy, or those in leadership
positions. It is for everyone. The sooner it sinks into our consciousness, the
less we will have to talk about in our society. Only then can we foster a
healthy society.

By: Chika Maduakolam

YOU CAN PLEA BARGAIN IN NIGERIA by Adedunmade Onibokun

by Legalnaija | Jan 18, 2016 | Uncategorized

Credits – www.triallawyerconfidential.com

Dansuki, the former National Security Adviser can get off the corruption charges by plea bargaining, do you agree?

If you are Nigerian or you
follow news and updates from my country, then you will be familiar with the
current anti-corruption campaign sweeping over the country with the Office of
the National Security Adviser under the Goodluck Jonathan administration right
in the middle of it. I expressed to a
colleague that the culprits may not see the inside of the jail cell if they
plea bargain and return the stolen national funds but my colleague disagreed
until I shared the provisions of the Administration of Criminal Justice Act
2015.

Plea bargaining is one
area of criminal law practice that is yet to be explored in Nigeria and very few Nigerians know it even exists in
our jurisprudence. Maybe, if we use it more often, it will serve as a means of
reducing the cost and time to government of prosecuting an alleged offender, it
will in turn ensure a smoother and faster administration of justice process and
it gives an accused person an opportunity to plead to a lesser sentence.

The Black’s Law Dictionary
defines “plea bargaining” as a negotiated agreement, between a prosecutor and a
criminal defendant whereby the defendant pleads guilty or no contest to a
lesser offense or to one of multiple charges in exchange for some concession by
the prosecutor. In Nigerian law, the enabling provision of the law for plea
bargains can be found in Section 270 of the Administration of Criminal Justice
Act, 2015.

The law in subsection 1
provides that –

“1) Notwithstanding
anything in this Act or in any other law, the prosecutor may:

a) Receive
and consider a plea bargain from a defendant
charged with an offence either directly from that defendant or on his behalf;

b) Offer
a plea bargain to a defendant charged with an offence.”

Furthermore, the
prosecution may enter a plea bargain with the defendant if the evidence isn’t enough
to prove the commission of the offence beyond reasonable doubt; the defendant
has agreed to return the proceeds of the crime or make restitution; where in a
case of conspiracy the defendant has fully cooperated with the investigation
and when the Prosecutor believes it is in the interest of justice or public
interest. The Prosecutor must however consult with the investigating police
officer.

In determining whether
entering a plea bargain is in the interest of justice, the prosecutor will
consider the following –

i.
The defendant’s willingness to cooperate in
the investigation and prosecution of others;

ii.
The defendant’s criminal history

iii.
The defendant’s remorse or willingness to
accept responsibility for his conduct.

iv.
The desirability for prompt disposition of
the case;

v.
The likelihood of obtaining a conviction;

vi.
The probable sentence or consequences if
the accused is sentenced;

vii.
The need to avoid delay;

viii.
The expense of a trial and appeal;

ix.
The defendant’s willingness to pay
compensation.

There are numerous
advantages to Nigeria embracing the plea bargain provision in our Administration
of Criminal Justice Act, 2015, such as a decongested prison, reduction in cost
of prosecution and also the opportunity for the accused to leniency after
showing signs for remorse. I hope lawyers are making the best of this legal
provision for the interest of their clients and the prosecution is also doing
same for the interest of the public.

Adedunmade
Onibokun Esq,

Dunmadeo@yahoo.com

Adedunmade/Twitter

WE NEED TO DOMESTICATE OUR INTERNATIONAL TREATIES by Adedunmade Onibokun

by Legalnaija | Jan 12, 2016 | Uncategorized

Credits-www.blog.unwatch.org

A treaty is an agreement under international law entered into by participants
in international law, usually
sovereign states and international
organizations. A treaty may also
be known as an (international)
agreement, protocol, covenant, convention, pact, or exchange of letters, among
other terms.

Nigeria
is a signatory to about 400 protocols and conventions according to Dayo
Bush-Alebiosu, a former lawmaker of the Federal Republic of Nigeria and former
Chairman, House Committee on Treaties and Bilateral Agreements. However,
Nigeria is not reaping the full benefits of these protocols and conventions and
here is why.

By
virtue of the provisions of the 1999 Constitution of the Federal Republic of
Nigeria, upon signing a treaty, it does not become law in Nigeria until
domesticated. The provision can be found in Section 12 of the Constitution. It
provides in sub-section 1 that –

“No treaty between the Federation and any other country
shall have the force of law except to the extent to which any such treaty has
been enacted into law by the National Assembly”.

Some
of these treaties offer business and investment opportunities for Nigerians and
the Nation; however, due to the lack of knowledge about these treaties, we are being
short paid even though our country is a signatory to these treaties. However,
who takes home the blame for these lapses? Nigerians don’t know.

While
the Constitution states that it’s the role of the National Assembly to
domesticate treaties, the Assembly itself does not have the full list of
treaties entered into by Nigeria and neither has the Executive begun the
process of domestication as stated by the Honourable Bush. A classic example of
a treaty that Nigeria is a signatory to is the Bilateral Air Service Agreement
between Nigeria and several countries. Others are the – Extradition Treaty
between Nigeria and South Africa signed in 2005; The International Convention
for the safety of Life at Sea signed in 2004 and the International Convention
on Civil Liability for Oil Pollution Damage signed by Nigeria in 2006.

It
is mandatory that as a country, we are able to identify all treaties and
protocols that Nigeria is a signatory to and domesticate those that will
benefit Nigeria. As not all these treaties may be beneficial to Nigeria in the
long run or in the face of current world and economic realities. I humbly use
this opportunity to urge the Executive and government of President Buhari to
work with the National Assembly to help domesticate all our treaties.

Adedunmade
Onibokun Esq,

@adedunmade/twitter

dunmadeo@yahoo.com

KEY CLAUSES TO NEGOTIATE IN AN EMPLOYMENT CONTRACT by Ivie Omoregie

by Legalnaija | Jan 11, 2016 | Uncategorized

Credits – www.employment-template.com

As an employee, one of the
prerequisites to having some sort of assurance in a particular organisation is
the Employment Contract. However, in a country such as Nigeria where
unemployment is rife, and hunger is real, many job-seekers do not wish to “rock
the boat” before gaining proper entry into an establishment. It is unlikely for
a newly employed person, who has been job hunting for at least seven years, to
negotiate any aspect of the Employment Contract and it is because of the high
rate of unemployment that many employers choose to take advantage by enforcing
onerous terms on their employees.

An Employment Contract, also known as
Employment Agreement is a binding document which sets out the obligations and
expectations of the parties, purportedly minimising future disputes.

A deeper look into the Labour Sector in
Nigeria will reveal that the applicability of the Labour Act is limited to low
cadre employees. This would mean that employees who cannot be regarded as being
low cadre employees by virtue of the provisions of that legislation can only
see recourse under the terms of their Employment Contract.

I believe that, at all times, one
should fight for ones rights. I’m not advocating the pursuit of unrealistic
goals (please do not go there and quote me whilst asking for a 2015 Range Sport
as the company car for your junior position); however I do believe that where
one is not comfortable with a particular term in their Employment Contract,
then one should raise this fact before signing on the dotted line.

Fundamentally, the employee has the
ball in his court and he is expected to take a closer look at the
various terms, duties and rewards enshrined in the document. Anyone who knows
their self-worth will always negotiate for terms that would be to their
benefit.

Having said that, some of the vital
issues an employee should look out for when reviewing his Employment Contract
include the following:

Compensation (A.K.A “Salary”,
“Allowance”, “Ego”, “Kudi”, “Owo”, or “Money”)
This is the main clause an employee must look out for. If the pay is not
sufficient consideration, then such an employee might as well remain unemployed
and stress free. When scrutinising one should also consider other benefits and
entitlements, such as bonus, leave allowance, housing and transportation.

I have a friend who didn’t spend up to
a year in her former place of work. She had to quit when she calculated her
expenses and placed it beside her salary – she realised the money left, after
deducting money spent on transport, wasn’t enough to make her live an “okay”
life.

Scope of Employment

Many employees rush into an
organisation at the very chance they get and fail to ask themselves “What
exactly is my role here and is there any other secondary role which is ascribed
to my position?”. At the end, we find absurdities arising, such as the
receptionist taking up the duty of the messenger or sometimes the role of
cleaner.

A lawyer friend of mine who’s just over
10 months in the profession commented on such instance where lawyers of his
level are ordered to perform duties not relating to their calling, such as
making daily trips to “Iya Eba” or “Ghana High” to pick up every
ones lunch.

Vacation Entitlement

In this jurisdiction, it is not unheard
of for there to be a clause in the Employment Contract baring the employee from
any entitlement to leave whatsoever for the first year of their employment.

Initially, I thought this was only
applicable to entry level employees, but recently I have come to learn that
this clause may be found in any contract an organisation is able to put it
into. Thus one can find themselves moving jobs after five years in the job
market, and suddenly unable to take time off to recuperate.

I have never actually understood this,
as very few immune systems can work non-stop for one entire year without rest;
in most instances, employees will merely call in sick and return a few days
later with a doctor’s note, thus making the “Leave” unmonitored and the
organisation fundamentally losing. As the saying goes “Man no be machine,
body no be fire wood”. If the organisation doesn’t know this, I’ll advice
that you let them know as soon as you are set to negotiate this clause.

Where such a clause exists, it is worth
negotiating to ensure that you are entitled to full staff entitlements from the
moment the employment is confirm, that is after the conclusion of any
applicable probation period.

Termination
It is always advisable to look for the grounds upon which the company can
terminate the Employment Contract.

In the UK, it is a norm for
organisations to have a clear procedure for termination; this is usually in the
form of oral warning, written warning, suspension then termination. Or where
there has been a serious incident, suspension, followed by an investigation
which may then lead to the termination of the Employment Contract. However here
in Nigeria, we do not have any uniform procedure for terminating an employee’s
contract; many organisations simply do not properly cater for termination in
the Employment Contract, thus leaving the employee at the mercy of the “Benevolent
Dictator” also known as “The Oga”.

It is for this reason one needs to
ensure termination is properly addressed in the Employment Contract. Where it
is addressed, it is also equally import to ensure that the contract does not
have an omnibus clause inserted in there. These clauses tend to be drafted in a
way that they capture a range of instances and are often used by employers as a
means of ending the Employment Contract abruptly; for example one such clause
could read “or any other instance which in the view of management may be
deemed as a breach of this Employment Contract”.

Notice Period for Resignation

Please, if you are not employed as
senior management, exactly why should you be mandated to give 3-6 months’
notice of intentions to leave the organisation? In the instance where one has
landed a fantastic role with a fantastic organisation, how many of these
organisations will be willing to wait 3-6 month for you to complete the
required notice period.

In most instances, once a member of
staff resigns, their work load will significantly reduce, with them being
present merely to hand over to the next parson. For this reason, I do not see
why a non-managerial role would need 3-6 months to hand over to their
predecessor.

Other essential terms in an employment
contract include the following:

1. Accident/disability
and death whilst on the job

2. Restriction of
post-employment trade;

3. The effective date of
the contract;

4. If the contract is
for a fixed term, the date when the contract expires;

5. Hours of work;

6. Paid sick leave;

7. Criteria for
promotion; and

8. Unilateral relocation
to another location.

Conclusion
I walk down the streets these days and I see in every corner written in chalk
or printed on A4 papers and pasted on rough walls, some sort of vacancy or job
opportunity calling for “workers”.

But I cannot help but ponder if the
said organistaion is seeking an individual who will add value to their team, or
a mere “slave” who they can easily manipulate and mistreat.

In most developed countries, workers
have their lives and jobs insured. Unfortunately, this is not the case here in
Nigeria, with some people arguing that ‘it is better to be doing something than
to do nothing at all’.

In the end, it is expected of every new
employee not to rush into a new opportunity that has got no opportunity at all
in its real sense.

By: Ivie Omoregie

DUTIES OF COMPANY BOARD OF DIRECTORS

by Legalnaija | Jan 6, 2016 | Uncategorized

Credits-blog.ipleader.in

Halima Durosinmi has just been informed that she has been appointed a director in XYZ Company, a Multi-national company operating in the heart of Lagos, Nigeria. Though excited and elated, Halima is however not so confident because she does not know or understand the duties of a director and as approached her lawyer to enlighten her.

Generally, the affairs of a company in Nigeria are regulated by the Companies and Allied Matters Act (CAMA), Cap C.20, Laws of the Federal Republic of Nigeria, 2004. Consequently, it is also CAMA that states the duties of directors in a company, without prejudice to the company’s Articles and Memorandum of association. Under CAMA, duties of directors can found in Section 279 of the Act. It provides that –

1. A director of a company stands in a fiduciary relationship towards the company and shall observe the utmost good faith towards the company in anytransacton with the company or on the companies behalf.

2. A director shall also act with utmost good faith and shall owe a fiduciary relationship when acting as agent of a particular shareholder or such shareholder is dealing with the company’s securities.

3. A director shall act in the best interest of the company so as to preserve its assets, further its business and promote the purposes for which such company was formed.

4. The director in performing his/her duties shall act to provide the interest of the company’s employees and the company’s members.

5. A director must exercise his/her powers for the purpose to which it was specified.

6. A director shall not fetter his discretion to vote in a particular way.

7. A director who delegates his powers shall not delegate such power in such a way as to amount to an abdication of duty.

8. No provision shall relieve any director from the duty to act in accordance with this section or relieve him from any liability incurred as a result of any breach of the duties conferred on him.

9. All duties imposed on a director by the act shall be enforceable against the director by the company.

The essence of the above provisions of CAMA provides that any company director must act in utmost good faith towards the company and ensure that their personal interest do not conflict with their duties as a director. For instance, the court in Olawepo V. S.E.C (2011)16 NWLR (Part 1272) page 122 stated that a director has a continuing duty to acquire and maintain a sufficient understanding of the company’s business to enable him discharge his duties as a director. The question of the duty of the director and whether it has been discharged must depend on the fact of each particular case the articles of association and the director’s role in the management of the company.

Adedunmade Onibokun, Esq. Dunmadeo@yahoo.com

@Adedunmade

PERSONS LIABLE FOR DEPORTATION

by Legalnaija | Jan 5, 2016 | Uncategorized

Credits-dailymail.uk

Munala was brimming with excitement as her plane touched down in Lagos, she had heard about the most populous African country and she could not wait to see the sights, it would be very different from her small Kenyan village she was sure. Her excitement seemed to douse when she observed the countenance of the immigration officer who held her passport in his hand, he wore a frown and excused himself to confer with a colleague and when he returned to his seat, he delivered the sad news. I am sorry madam but I cannot allow you into the country because your passport is invalid. 7 hours later, Munala was on a plane back to Kenya and as the plane taxied down the runway with the Lagos night lights slowly fading into the dark, she felt the tears run down her eyes.

This has happened to several people visiting Nigeria and yes, immigration officers have the lawful authority to deny a person entry into Nigeria by virtue of the provisions of the Immigration Act, CAP 11, LFN 2004. Particularly, the Act spells out certain people whom will be denied entry into Nigeria or whom will be deported. This can be seen in Section 18 of the Immigration Act.

The law provides in subsection 1 that – any person within the following classes shall be prohibited or liable to be refused entry into Nigeria or deported, these class of persons include:

a) Persons without a visible means of support and will likely become a public charge;
b) Any idiot, insane person of persons suffering from mental illness;
c) Persons convicted of a crime which is an extraditable offence in a foreign country;
d) Any person whose admission in the opinion of the Minister will be contrary to public interest;
e) Any person against whom an order of deportation from Nigeria is pending.
f) Any person who –
i. Does not have a valid passport;
ii. Being a person under the age of 16years has not in his possession a valid passport or is unaccompanied by an adult on whose valid passport particulars such person appears;
g) any prostitute
h) any person who is or has been a brothel keeper; a householder permitting the defilement of a young girl in his premises; a person allowing a person under 13 years to be in a brothel; a person causing or encouraging the seduction or prostitution of a girl under 13; a person trading in prostitution and a procurer i.e. a person who procures young and underage girls for prostitution.

While the law’s aim to prevent pedophiles from coming into Nigeria is commendable, I wonder how the immigration officer will be able to identify these persons especially as the criminal records of the applicant is usually not available to the immigration officer and such information is not provided for in an international passport.

Adedunmade Onibokun
@adedunmade
dunmadeo@yahoo.com

CAN POLICE SEARCH MY CAR?

by Legalnaija | Jan 4, 2016 | Uncategorized

Credit – criminaldefendant.com

I remember a time when it was regular to see police officers mounting road blocks on Nigerian roads. The police used these road blocks as a means for searching vehicles they suspected of transporting unlawful items or suspicious persons. However, it was largely recorded that officers also used this opportunity to extort motorists, sometimes by accusing such motorists of an illegality or by outright demand for a settlement or cash gift. Incredibly, though, the Police hierarchy outlawed check points and they have gradually become a thing of the past.

Nigerians, however, still deliberate over the right/power of the police to stop and search a vehicle or its passenger without a search warrant. For instance,

when a police officer waves you down and demands to search your vehicle without a warrant or a reasonable cause in your opinion, couldn’t it be termed a form of harassment? Truth is, the Nigerian police have a very wide range of powers in line with their mandate to provide adequate peace and security to every Nigerian and in regard to searching persons they are covered by the provisions of the Police Act, which states in Section 29 that, a police officer may detain and search any person whom he reasonably suspects of having in his possession or conveying in any manner anything which he has reason to believe to have been stolen or otherwise unlawfully obtained.

The above law empowers the police to search any person but the law does not define the elements that must exist before a policeman can be said to reasonably be suspicious of anyone, this part of interpretation is often left to the police officer. Therefore, a person with a beard can be reasonably suspected of being a terrorist or a youth with a tattoo or dreadlocks can be reasonably suspected to be a misfit or hooligan.

This lacuna leaves room for unscrupulous officers to still take advantage of the law and extort motorists, however, the Police must always be commended for their efforts in fighting crime and keeping the streets safe and its such powers as that contained in the above Section 29 that enables them to do so. If you are ever stopped by a police officer, I recommend you pull over and do exactly what he says, he has the authority to do so and remember that not everyone who stood up to Nigerian policeman lived to tell the tale, we still have trigger happy officers in the police force.

Adedunmade Onibokun
@adedunmade
dunmadeo@yahoo.com

DID YOU KNOW: – PENALTY FOR HUMAN TRAFFICKING

by Legalnaija | Jan 3, 2016 | Uncategorized

Do you
know that all forms of human trafficking in Nigeria are prohibited?

Any
person who recruits, transports, transfers, harbours or receives another person
by means of –

a.
Threat or use of
force or other forms of coercion.

b. Abduction, fraud,
deception, abuse of power or position of vulnerability;

c.
Giving or receiving
of payments or benefits to achieve the consent or control of a person having
control over another person, for the purpose of exploiting that person;

Commits an
offence and is liable on conviction to imprisonment of not less than 2 years
and a fine of not less than N250,000.

Section 13, Trafficking In Person (Prohinbition) Enforcement And
Administration Act 2015.

ONE WAY TO REDUCE COST OF LITIGATION FOR COUNSEL AND PARTIES

by Legalnaija | Jan 2, 2016 | Uncategorized

Credits – www.ngrguardiannews.com

I hate it when I
move heaven and earth to ensure I get to Court early only to find out that the
court will not be sitting or in other words the judge will not be coming. Numerous
times, I have driven in the Lagos traffic for 3 hours just to ensure I get to
court well before 9 am or travelled to another state only to hear the court registrar address counsel and
inform us that the court will not be sitting. It hurts and I remember a counsel
who expressed his displeasure after having come all the way from Abuja to court
in Lagos and be informed that the court will not sit, he had expended money for
travel and even hotel lodging.

If you are in
litigation practice or a litigant, you must have experienced this. There have
been many persons who stay longer in jail, prison or detention just because the
court has not sat to determine their bail applications and they thus have to
stay back in detention for many more weeks awaiting another adjournment date.

Another instance,
is a client who hires a private plane on the insistence of his lawyer to ferry
the firm’s team from Abuja to court in Lagos only for everyone to get to court
and learn the judge will not be coming, how frustrating will that be to the
client and if such client gets judgment in his favour eventually, what will be
the value of such victory to such a client who has expended such expense in the
course of litigating his matter before the court.

Sadly the judiciary
doesn’t seem to care, I have never heard it discussed in symposiums before, neither
has there been any focus on solving this issue, apparently the judges do not
even see it as an issue. Why should a counsel or litigant spend time and money to
get to court only to find out that the court will not sit. Doesn’t this
practice increase the cost of litigation exponentially? The courts have a duty
to ensure a speedy and cost effective dispensation of justice and not to mount unnecessary
pressure and costs on litigants.

I am using this
medium to urge the courts to save litigants and counsel from the pains and cost
they cause by not giving prior information that the court will not be sitting. And
all they need to do is send a text message to counsel. A text message cost only
four naira and I am sure that a court with a daily budget of 500 naira will
have enough funds to text all counsel on the cause list to inform them that the
court will not be sitting. I don’t know
if this is too much to ask from the judiciary or maybe they are too busy to
even care.

Adedunmade Onibokun

@adedunmade

Dunmadeo@yahoo.com

TAXATION OF FOREIGN COMPANIES IN NIGERIA by Odoemenam Chidi

by Legalnaija | Dec 31, 2015 | Uncategorized

The recent and drastic fall in oil
prices in the global market has hit hard on oil revenue dependent nations,
Nigeria inclusive. Thus, this has led the Government to create budgetary
policies seeking to resort to other sources of revenue, taxation being at the
forefront. However, if the Nigerian government is determined to increase its
tax revenue base, then certainty of laws governing corporate taxation of both
Nigerian and foreign companies carrying on business in Nigeria has to be at the
premium.

While a Nigerian company is taxable on
its worldwide income, a non-resident entity is liable to tax in Nigeria on its
profit attributable to the business or trade carried on in Nigeria. The issue of
taxation of foreign unincorporated companies in Nigeria has often stirred up
legal controversy.

This may be attributed to the conflicting provisions in the
Companies and Allied Matters Act and the Companies Income Tax Act. While the
CAMA provides that foreign companies seeking to carry on business in Nigeria
must first incorporate with the Corporate Affairs Commission (except companies
exempted under the CAMA) before they can be allowed to carry on business in
Nigeria, the CITA offers a sharp contrast to this rule, stating that a foreign
company need not be incorporated before it can be deemed to have carried on
business in Nigeria, insofar as it falls under the provisions of section 13
of the CITA. Thus, supporters of the derogation of the rule in section
54 of the CAMA by the CITA may reiterate the dictum of Lord
Morrison in Ministry of Finance v Smith (1927) AC 193 at 193,
where the court stated that if a company carries on trade illegally and makes a
profit, such profit is subject to tax.

Taxation of Foreign Companies under the
CITA

Section 9(1) of the Nigerian Companies
Income Tax Act (CITA) provides that tax is payable at the specified rate
upon the profits of any company accruing in, derived from,
brought into, or received in Nigeria in respect of certain transactions
(emphasis mine). The specified rate for corporate taxation in Nigeria,
excluding companies involved in upstream petroleum operations is 30% CIT and 2%
Education tax.

By the provisions of Section 13(2)
of the CITA, the profits of a company, other than a Nigerian company,
from any trade or business are deemed to be derived from Nigeria in the
following circumstances-

1. If that company has a
fixed base (as limited in section 13(3)) of business in Nigeria to the extent
that the profits are attributable to the fixed base.

2. If it does not have a
fixed base but habitually operates a trade or business through a person in
Nigeria, or in circumstances set out in section 3(2)(b)

3. If the trade or
business involves a single contract for surveys, deliveries, installation or
construction, the profit from the contract (turnkey contract).

4. Where the trade or
business are not made at an arm’s length.

The Supreme Court while interpreting
the meaning of “fixed base” in Shell International Petroleum BV v
FBIR stated that the phrase should not be confused with “residence”, but
that in the context of the CITA, it connotes a place where a company has
carried on business for a long time notwithstanding that it is not the owner of
the place.

It is noteworthy to note that sequel to
a ruling obtained in SAIPEM v FIRS, where the court held that the
profits of a foreign company once derived from Nigeria are subject to tax
regardless of whether any of the conditions in section 13 has been met, the
FIRS has utilized the provisions of section 30 of the CITA which empowers the
Federal Inland Revenue Service (FIRS) to assess companies to income tax based
on a reasonable percentage of turnover. This is referred to as the deemed
profit basis, best of judgment assessment or presumptive taxation.

In practice, the FIRS while assessing
non-resident companies to tax, prescribes a deemed profit of 20% of turnover
derived from Nigeria (assuming all tax deductible expenses and capital
allowance of 80%), which is then taxed at the corporate income tax rate of 30%.
This results in an effective tax of 6% of turnover. This assessment basis has
been widely adopted by non-resident companies, mostly due to its simplicity and
the fact that disputes regarding tax deductibility of costs would be avoided.

A clear reading of the decision of the
court in SAIPEM v FIRS would deduce that a non-resident company who
although does not fall under the fixed base rule or other provisions of section
13 of the CITA would still be liable to Nigerian Corporate Tax if the FIRS can
prove that the company derived income from Nigeria.

However, in a judgment delivered by
Justice M.B IDRIS of the Federal High Court sitting in Ikoyi on September 18th
2015 in the case between JGC v FIRS, being an appeal from the Tax Appeal
Tribunal, the court overruled its earlier ruling in SAPIEM’s case. In the
aforementioned case, the FIRS had raised notices of assessment on JGC who had
entered into a contract with Mobil Nigeria Unlimited but had not performed any
part of the contract in Nigeria. The court held that JGC was not liable to pay
Nigerian corporate tax unless it falls under the provisions of section 13 of
the CITA.

CONCLUSION

The varying judgments of the Federal
High Court in SAIPEM v FIRS and JGC v FIRS coupled by the recent
directive issued by the Transfer Pricing Division of the FIRS where it directed
non-resident companies to comply with the provisions of the CITA and file its
full tax returns, all are unneeded uncertainties which will only harm the trust
placed on the revenue authorities in this time when the country is in dire need
of tax payers money.

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