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Reiss and Company Nigeria, Ltd. v. Federal Board of Inland Revenue

Nigeria Federal Revenue Court 1977. Jurisdiction over State Revenue including Taxation. Facts. Reiss

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Reiss and Company Nigeria, Ltd. v. Federal Board of Inland Revenue

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    1. Reiss and Company (Nigeria), Ltd. v. Federal Board of Inland Revenue Headley G Campbell CSA 6470

    2. Nigeria Federal Revenue Court 1977 Jurisdiction over State Revenue including Taxation

    3. Facts Reiss & Co. (Nigeria) Ltd is joint stock company incorporated in Nigeria Handelsvereeniging v/h Reiss & Co. (Amsterdam) is a private limited liability company incorporated in the Netherlands Reiss & Co. (Amsterdam) owns 55% of the shares in Reiss & Co (Nigeria) They did not control the affairs of Reiss Nigeria

    4. Facts Reiss & Co.(Nigeria) served as agent for Reiss & Co (Amsterdam) They introduced customers to the parent company -Reiss & Co (Amsterdam) They forwarded all orders to the parent company

    5. Facts The parent company accepted or rejected the order The parent company communicated directly with the customer They invoice the customers directly They charge a profit of 14% of the value of the order

    6. Facts They have a gentleman’s agreement where they pay Reiss & Co (Nigeria) 50% of the profit for their troubles, upon receipt of payment from the customers

    7. Facts Reiss & Co (Nigeria) submitted tax returns – 1971/72 to 1974/75 showing their 7% as the taxable income Nigeria’s Federal Board of Inland Revenue made an additional assessment on the other 7% - taxing the entire 14% earned by the Dutch company

    8. Facts Reiss & Co (Nigeria) appealed to the Board of Appeal Commissioners and loss They then appealed to the Federal Board of Inland Revenue

    9. Legal Issues Is Reiss & Co (Nigeria) a separate company from Reiss & Co (Amsterdam)? What is the taxable income of Reiss & Co (Nigeria)? Where the source of income tax has accrued and to whom?

    10. Reiss & Co (Nigeria) won. They are entitled to a refund of any taxes paid in excess of the amount due on the 7% received

    11. Rationale Rule in F.L. Smidth & Co v. Greenwood - the place where the trade is exercised is the place where the transactions forming the alleged business are closed

    12. Mitchell v. Egyptian Hotels Ltd Where the business of a company is wholly carried on abroad, it is not assessable to local income tax

    13. Grainger & Sons v. Gough A foreign merchant who canvasses in the UK for orders for sale of his merchandise to customers in the UK does not exercise a trade in the UK within the meaning of the Income Tax Acts so long as all contracts for the sale and all deliveries of merchandise are made in a foreign country

    14. Companies Income Tax Act (1961) Sect. 18(2) “The profits of a company other than a Nigerian company from any trade or business shall be deemed to be derived from Nigeria to the extent to which such profits are not attributable to any part of the operations of the company carried on outside Nigeria”

    15. Relevancy The tax implications are different depending on the tasks performed and the relationship between the local and foreign company Agent Branch Subsidiary Representative

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