August 2, 2018
The Federal High Court (FHC) recently held, in the case between IHS Nigeria Limited (IHS) vs Attorney General of the Federation & Others, that telecommunications mast/base stations do not constitute “Business Premises” in respect of which “Business Premises Registration fees” or “Environmental Support fees” are collectible by the State Government.
IHS is a telecommunications company with several base stations across Nigeria including Abia State. According to the Registration of Business Premises Law of Abia State, the Abia State Government is empowered to levy fees for the registration of certain listed “Business Premises” including telecommunication mast/base stations. Similarly, telecommunication/mast base stations are listed as “Business Organisations” liable to the payment of environmental fees under the Abia State Basic Environment Law.
Pursuant to the foregoing, the Abia State Environmental Protection Agency, in 2016, issued demand notices to IHS to pay “Environmental Support fees” for their base stations in Abia State. In addition, the Abia State Government issued several demand notices to IHS for the “Registration of Business Premises” for 253 of its base stations in Abia State at the rate of N100,000 each. Consequently, IHS instituted an action before the FHC challenging the legality of the demand notices on the grounds that base stations do not constitute “Business Premises” for the purpose of levying the charges.
The FHC ruled in favour of IHS holding that a telecommunication mast/base station does not constitute “Business Premises” by itself for tax purposes. This is because such taxes or levies are already imposed on the chargeable office of the Company and levying same on the base stations amounts to imposing multiple taxes on the Company. Thus, the Court held that the inclusion of base stations, as part of “Business Premises”, under the Abia State Laws for collection of “Environmental Support fees” and “Business Premises Registration fees”, was ultra vires and illegal.
This Judgment addresses one of the issues relating to multiple regulation and taxation within the telecommunications industry. Based on this judgment, telecommunication companies in Abia State should no longer be required to pay “Business Premises fees” or “Environmental Support fees” on each of their base stations. This is expected to improve the ease of doing business in Nigeria as it would save significant operating cost for telecommunication companies.
We will continue to monitor regulatory issues of this nature and are always willing to provide further information to our clients on tax and regulatory issues to assist in reducing the cost of doing business in Nigeria.