Court Orders Total Square 14m Br Corporate Tax


Total will pay 34pc of the disputed amount




Justices at the Cassation Bench ruled in favour of the tax authority, which requested Total Ethiopia S.C settle 41 million Br of corporate tax ordering the latter to pay 34pc of the amount.

The majority vote of the two justices ruled that Total has to pay only 14 million Br out of the total disputed amount, while one of the justices voted the company should be fully relieved from tax.

Started five years ago when Ethiopia Revenues and Customs Authority (ERCA) levied 41 million Br tax on Total. Calculating 37.5 million Br unpaid tax by Mobil East Africa Ethiopia, which was acquired by Total 12 years ago. ERCA also requested Total to settle 3.8 million Br payable tax for three consecutive years a decade ago.

In 2013, ERCA sent a letter to Total requesting it to settle the amount due; Total reacted with a complaint to the Authority which sustained the amount. Total then took the case to the Tax Appellate Commission which reduced the amount to 14 million Br.

Total then took the case one step ahead filing an appeal to the Federal High Court Appeal Bench, which can only review the procedure in tax-related matters. In its petition, the Commission passed the ruling without following the proper procedures, of which the High Court rejected the case stating it did not get any procedural clash.

Displeased with the High Court’s ruling, Total took the case to the Cassation Bench claiming the lower court made a fundamental error of law while dealing with the case. In its appeal Total claimed that it should not be asked for the amount, citing the period of limitation and that ERCA requested the due amount after five years, and corporate tax would not be calculated from a profit made at a branch level.

Besides, Total Ethiopia claimed that 21.61 million Br out of the total amount due should not be subjected to tax as it was injected as capital when it acquired Mobil. Thus, capital is not subjected to tax by law, asserted Total.

In its statement of defence, ERCA argued that Total has reported the profit, which it was currently claiming as profit made at its branch. If it was earned at a branch, the company would not have declared it at the Federal level, reads ERCA’s defence.

After reviewing the case for 10 months, justices of the Cassation Bench sustained the lower court’s ruling, and the Commission decisions asserting Total’s claim was contradictory in itself. When Total stated about a period of limitation, it signaled that there was a taxable amount which was not collected in the right schedule, ruled the justices in the latest court session that was held three weeks ago.



By BETHELHEM BAHRAN
FORTUNE STAFF WRITER

Published on Apr 06,2018 [ Vol 18 ,No 936]


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