Court declares deduction of taxes, levies from Centenary Freezones Company unlawful

A Federal High Court, Abuja has declared the charges and deductions to the tune of over N16 million from the accounts of the Centenary City Freezones Company and Prime Properties FZE by the Federal Inland Revenue Service(FIRS) as illegal and unconstitutional.

The deduction were regarded as withholding and value added tax.

Justice Donatus Okorowo, in a judgment, held that the plaintiffs were exempted from the payment of all federal, state and local government taxes, levies and rates by virtue of their registration and operations within the Centenary Economic City Zone.

He said this was in accordance with the provisions of Section 8 of the Nigeria Export Processing Zones Act.

Justice Okorowo, consequently, restrained the FIRS and Standard Chartered Bank of Nigeria from further charging, levying or deducting any tax, levies or duties from the two companies.

The judgment delivered on June 23 was in respect of suit no FHC/ABJ/CS/78/2022 filed by the plaintiffs and argued by their counsel, Nkemakolam Okoro.

According to the certified true copy of the judgment dated July 5, 2023, the judge directed the defendants to refund forthwith, N14, 616, 289.06 as withholding tax and N2,164, 659.00 as value added tax, illegally deducted from the accounts of Prime Properties FZE (2nd plaintiff), domiciled with Standard Chartered Bank (both Naira and Domiciliary) between 2015 to 2018.

Justice Okorowo held that; “Section 10 (2), the Export Processing Zone Act that grants licence to operate within the zone, by the authority shall constitute registration of the company within the zone.

“The 2nd plaintiff is an enterprise within the Centenary Economic City freezone. Section 8 of the Act provides that ‘operating within a zone shall be exempted from all federal, state and local government taxes, levies rates and rates.

“As submitted by the plaintiff counsel, the provision of Section 8 of the NEPZA Act is couched in mandatory form, hence ought to be complied with, by the defendants, especially given the use of the word shall in the status,” he said.

The judge also directed the FIRS to pay the 2nd plaintiff N5, 034, 284.42 being 10 per cent interest on N14, 616, 289. 05 deducted from the 2nd plaintiff’s account as VAT, by the FIRS from 2015 to 2020.

He equally made an order directing the defendants to pay exemplary damages in the sum of N5 million jointly and severally in favour of the plaintiffs.