*Oil firm disputes 3% tertiary education tax rate applied to 2023 profits

South Atlantic Petroleum Limited (SAPETRO), the oil firm owned by billionaire, General Theophilus Danjuma, is locked in a legal dispute with Nigerian tax authorities over an additional education tax assessment of $520,297.99 for the 2023 financial year.

The dispute centres on the application of an increased tertiary education tax rate to SAPETRO's 2023 profits.

The company has rejected the additional assessment and is contesting the tax authority's calculation, according to a report by Eighteen-Eleven Media. The disagreement has reportedly dragged on for about two years, placing another major tax dispute involving the oil and gas company before the Nigerian legal system.

The conflict stems from the Finance Act 2023, which amended the Tertiary Education Tax rate from 2.5 per cent to 3 per cent of assessable profit, effective September 1, 2023. The central question in the SAPETRO dispute is whether the higher rate was properly applicable to the company's entire 2023 assessment, or whether income earned before the September effective date should have been taxed at the previous 2.5 per cent rate.

This is not the first time Nigerian oil companies have challenged the retroactive application of the increased rate. In February 2026, Justice Daniel Osiagor of the Federal High Court in Lagos dismissed five separate suits filed by Shell Nigeria Oil Products Limited and four affiliated companies challenging the same 3 per cent rate on their 2023 profits.

The court held that the tax is an annual levy computed on a company's full accounting period and that Nigerian law does not permit the proration of an accounting year for differential tax treatment.

SAPETRO's dispute with the tax authorities is the latest in a series of legal battles over petroleum tax assessments. In an earlier case, CNOOC Exploration and Production Nigeria Limited and SAPETRO challenged tax assessments issued by the Federal Inland Revenue Service in connection with their petroleum operations, including a dispute over tertiary education tax.

That case eventually reached the Court of Appeal, which considered the relationship between the Tax Appeal Tribunal and the Federal High Court in tax matters.

The company, which holds interests in major petroleum assets including OML 130, has been a significant player in Nigeria's upstream sector and has previously been involved in tax disputes extending beyond education tax.

SAPETRO's challenge does not amount to an allegation that the company evaded tax. Nigerian tax law provides taxpayers with mechanisms for objecting to assessments and challenging disputed liabilities through the appropriate tribunals and courts. The final financial liability will depend on the outcome of the proceedings and any subsequent appeal. As of the latest publicly available reports, the parties remain engaged in the dispute, with SAPETRO contesting the additional assessment and the tax authorities defending their position.