Nigeria: Ancillary income does not constitute inbound freight income (Federal High Court decision)
Ancillary activities, such as cleaning fees and container demurrage, does not constitute inbound freight income liable to tax in Nigeria
Ancillary income does not constitute inbound freight income
The Federal High Court Lagos Judicial Division held that income from ancillary activities, such as cleaning fees and container demurrage, does not constitute inbound freight income liable to tax in Nigeria.
The case is: CMA CGM Delmas SA v. Federal Inland Revenue Service
The taxpayer, a French shipping company engaged in the transportation of goods to and from Nigeria from foreign sellers and buyers, acknowledged that it derived income from various sources (including container demurrage, shipping line agency charges, bounded terminal commission, cleaning fees, sales of containers, and damage recovery costs), but contended that its primary source of income was from the carriage of goods and not the ancillary activities that it inevitably engaged in during the carriage of goods into and out of Nigeria. Consequently, the taxpayer argued that its income from such ancillary activities does not constitute inbound freight income liable to tax in Nigeria, and the court agreed.
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