Electricity in Africa

Tax Alert – TAT ruling on the case between StarDeep Water Petroleum Limited and Lagos State Internal Revenue Service

The Tax Appeal Tribunal (“the Tribunal”), sitting in Lagos, recently ruled in favour of StarDeep Water Petroleum Limited (“StarDeep” or “the Appellant”) in its case with the Lagos State Internal Revenue Service (“the Respondent”). The principal issue in dispute was whether the Appellant was required to deduct and remit Pay-As-You-Earn (PAYE) tax on the salaries paid to the employees provided to it by Chevron Nigeria Limited (CNL) between 2005 and 2009 financial years. The salaries of these employees were borne by CNL.

The Respondent relied on the “Manager concept” under the PAYE Regulations, 2002 in arguing that StarDeep had the responsibility to deduct and remit PAYE tax on the salaries of these employees, whether or not they were its employees. On this basis, the Respondent raised a PAYE tax assessment on the Appellant.

Based on the “Manager concept” in Regulation 2(3) of the PAYE Regulations, where an employee works under the supervision or management of a person who is not his employer, that person (referred to in the Regulations as the “Manager”) is required to furnish the particulars of the employee’s emoluments to the relevant State Internal Revenue Service (SIRS), deduct the tax due from the employee’s emolument, and remit the tax deducted to the SIRS.

The Appellant, on its own part, argued that the PAYE Regulations did not apply to it during the years in question because it did not have any employees of its own at the time.

After considering the arguments of both parties, the Tribunal upheld the position of the Appellant that the provisions of the PAYE Regulations did not apply to it during the years under consideration. The Tribunal, therefore, discharged StarDeep of the PAYE tax assessment.

For further enquiries on the above, please contact:

Victor Onyenkpa


David Okwara

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