TY Danjuma’s SAPETRO and Nigeria locked in two-year tax dispute

After rejecting a demand for an additional $520,297.99 in 2023 tax liabilities, South Atlantic Petroleum Limited (SAPETRO), owned by billionaire retired military general Theophilus Yakubu Danjuma, is locked in a legal battle with Nigeria’s tax authorities.

Now in its second year, the legal battle stems from a dispute over the percentage used to calculate SAPETRO’s Tertiary Education Tax (TET) for 2023. It followed an amendment to Nigeria’s Finance Act, which increased the TET rate from 2.5% to 3% of companies’ profits.

The Federal Inland Revenue Service (FIRS), now the Nigeria Revenue Service (NRS), says the oil company underpaid its TET by applying the old 2.5% rate to part of 2023. It is demanding an additional $520,297.99 on top of the $6,763,871 SAPETRO had already paid for the year.

SAPETRO challenged the assessment before the tax appeal tribunal, arguing that the higher rate should apply only from the date the amendment to the Finance Act took effect. SAPETRO is part of Danjuma’s TY Holdings Limited, a business empire spanning shipping, oil and gas, real estate, hospitality, pharmaceuticals and manufacturing.

The 87-year-old retired lieutenant general served as chief of army staff from 1975 to 1979 under the military administration of Olusegun Obasanjo, and was later appointed defence minister when Obasanjo returned as civilian president in 1999.

The company is chaired by his wife, Daisy Danjuma, a former senator.

The rate dispute

According to court filings seen by The Africa Report, the dispute dates back to September 2024, when the NRS wrote to SAPETRO demanding $520,297.99 in additional TET for the 2023 financial year. In Nigeria, TET is a mandatory government levy on the assessable profits of registered companies to fund and support higher education.

It is paid by all companies whose annual turnover exceeds ₦25m (about $19m); companies below this threshold are exempt. Companies are required to file their tax returns and pay the applicable TET within six months of the end of the accounting period.

In May 2023, an amendment to Nigeria’s Finance Act 2023 raised the TET rate from 2.5% to 3%, but it was approved to take effect in September. In calculating its 2023 TET, SAPETRO applied a 2.5% rate to the months preceding September and 3% from September onwards, resulting in a total liability of $6,763,871.

The NRS rejected that calculation, arguing that 3% should be applied for the whole year, resulting in an additional assessment of $520,297.99.

The legal debate

The tax authorities argue that a company’s profit is calculated annually rather than monthly and that SAPETRO’s tax assessment fell within the 3% rate regime. “The assessable profit of a company can only be assessed for a period, as fixed by the statute, which is for the year of assessment,” it says. “In this case, assessable profit can only be determined yearly and not a period of three or four months, as contemplated by the appellant.”

According to the tax authority: “The rate applicable as at 31 December when the accounting period of the appellant ended was 3%. Consequently, there is no room for proration as the relevant period is the entire 2023 and not parts of 2023.”

It therefore asked the tax appeal tribunal to dismiss SAPETRO’s challenge and to uphold the additional $520,297.99 assessment. But in a rejoinder to the NRS’ defence, SAPETRO contends that there is no legal basis for the argument that, where multiple TET rates apply within a single accounting period, only the rate introduced later in that period will be relevant to determining the TET liability for the entire accounting period.

The case was last heard in August and is due to continue on 23 September.

A changing tax regime

The legal action over the 2023 assessment comes at a time of a major overhaul of Nigeria’s tax systemunder President Bola Tinubu. Following the administration’s tax reform, the 3% TET has been replaced by a 4% Development Levy, which consolidates several sector-specific levies, including TET, IT, NASENI and Police Trust Fund levies, into a single payment.

The government says the tax reform, Nigeria’s most ambitious in decades, is intended to simplify tax administration, reduce the compliance burden on businesses and increase revenues. It adds that the measures are already producing results, with tax collections up by 49% in the first half of 2026 compared with the same period a year earlier.

In May, the country’s tax authority brought a criminal action against Italian engineering firm Saipem Contracting Nigeria Limited and two of its directors over alleged non-remittance of tax obligations, including TET, amounting to ₦66,4bn (around $48m) and $938,080. (The Africa Report)