Court declares law firm not liable to pay companies’ income tax

By Robert Egbe

A Federal High Court in Warri has held that the law firm of Ama Etuwewe & Co, owned by a Senior Advocate of Nigeria (SAN) Mr Ama Etuwewe, is not liable to pay companies’ income tax

Justice Emeka Nwite held that law firms, not being companies, do not fall within the contemplation of the Companies Income Tax Act.

The judge made the declaration on September 30, 2019, in a suit marked FHC/WR/CS/27/2019 filed by Etuwewe against the Federal Inland Revenue Service & GTBank, who are first and second defendants.

He ordered the defendants to pay the plaintiff N5,5million for illegal and unlawful freezing of the plaintiff’s account.

The court noted that concerning the payment of Value Added Tax (VAT) by law firms, there was evidence that Etuwewe’s client, Chevron Nigeria Ltd, paid VAT in respect of the professional fees paid to the plaintiff.

Therefore, Etuwewe was not required to make VAT remittance and withholding tax to the FIRS.

The judge held: “An order is hereby made directing the defendants to immediately vacate, remove and or cancel any restriction placed on the plaintiff’s account…by the second defendant.

“An order is hereby made nullifying the first defendant’s appointment of the second defendant as its collecting agent in respect of the plaintiff’s account in the name of Ama Etuwewe & Co with the second defendant as same is unlawful, null and void.

“An order is hereby made striking out the name of the plaintiff’s business name Ama Etuwewe & Co from the first defendant’s letter addressed to the second defendant dated December 5th 2018 as the plaintiff is not liable to pay Companies Income Tax.”

The judge also perpetually restrained the first defendant “from 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”.

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