Law Offices Are Not Eligible To Pay Companies Income Tax, Court Rules

The Federal High Court sitting in Warri has held that law firms are not to pay Companies Income Tax.

Justice Emeka Nwite J. delivered the Judgment on Monday, the 30th September in a suit filed by one of the newly sworn-in Senior Advocates of Nigeria, Ama Etuwewe Esq against Federal Inland Revenue Service &Anor.

Delivering the judgment in the Suit No. FHC/WR/CS/27/2019, the court held that law firms not being companies are not within the contemplation of the Companies Income Tax Act, to pay companies income tax.

Regarding the payment of VAT by law firms, the Court held that evidence abounds that the client of Ama Etuwewe, in this case, Chevron Nigeria Ltd, paid VAT in respect of the professional fees paid to the Plaintiff, and therefore, the Plaintiff is not required to make VAT remittance and withholding tax to the FIRS.

The judgment read in part;

An order is hereby made directing the defendants to immediately vacate, remove and or cancel any restrictions placed on the plaintiff’s account number with the 2nd Defendant.

That an order is hereby made nullifying the 1st Defendant ‘s appointment of the 2nd Defendant as its collecting agent in respect of the plaintiff’s account number in the name of Ama Etuwewe & Co. with the 2nd Defendant on the 8/2/19 as same as unlawful, null and void.

That an order is also made striking out the name of the plaintiff’s business name Ama Etuwewe &Co. from the 1st Defendant’s letter addressed to the 2nd Defendant dated December 5th, 2018, as the plaintiff is not liable to pay Companies Income Tax.

And an order of perpetual injunction restraining the 1st defendant whether by itself, its agents, privies, employees, servants and/or through the 2nd Defendant. From demanding and/or further demanding the payment of Companies Income Tax from the plaintiff being an individual who carries on legal practice under the name and style of Ama Etuwewe &Co.

The sum of 5,000,000.00 is awarded as damages jointly and severally against the Defendants for illegally and unlawfully frozen the account of the plaintiff with the 2nd Defendant.

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