Introduction
In a judgment delivered on 30 January 2026 in Peter Oluwafemi Atoyebi, SAN v. Barclays Bank Plc & Anor., the Nigerian Supreme Court held that Barclays Bank carried on banking business in Nigeria through its representative office, Barclays Groups Representative Office (Nigeria) Limited (“Rep Office”) which attracted customers, facilitated communications, and served as a point of contact for Barclays Bank. From a tax perspective, the reasoning of the Supreme Court implies that a representative office of a foreign bank constitutes a permanent establishment (“PE”) of the foreign bank. Although not a tax decision, the reasoning of the Supreme Court has significant tax implications for foreign banks operating in Nigeria through representative offices, and this article examines the potential tax implications of the decision in light of the changes introduced by the Nigeria Tax Act, 2025 (“NTA”) to Nigeria’s non-resident taxation framework.
Overview of the Judgment
The dispute arose from a banking relationship between Mr Atoyebi and Barclays Bank Plc. Although his account was domiciled with Barclays’ international branch in England, he opened the account through the Rep Office in Lagos and dealt with the Bank through the Rep Office. In the course of the banking relationship, Mr. Atoyebi issued several cheques which he alleged were wrongly dishonoured by Barclays Bank. As a result, he commenced the suit at the High Court of Lagos against Barclays Bank and the Rep Office as 1st and 2nd Defendants respectively, seeking damages for breach of contract and negligence. He also obtained leave of court for the service of the court processes on Barclays Bank in London or through the Rep office in Lagos and for the issuance of concurrent writs of summons.
Upon service of the court processes, the Respondents filed a motion for orders (i) striking out the name of the 2nd Respondent on the ground that it was not a proper party to the suit, (ii) setting aside the service of the writ of summons on the 1st Respondent for lack of jurisdiction, and (iii) striking out the suit on the ground that it constituted an abuse of court process. The High Court refused the first and third prayers but granted the second prayer on the ground that since the 1st Respondent carried on business in the United Kingdom and the alleged dishonouring of the checks occurred in the 1st Respondent’s branches in London, the Court lacked jurisdiction to adjudicate the claims against the 1st Respondent.
The Appellant’s appeal against the ruling of the High Court was dismissed by the Court of Appeal on the grounds that (i) the Respondents were not licensed to operate banking business in Nigeria and the 1st Respondent was not carrying on banking business through the 2nd Respondent in Nigeria, (ii) the 2nd Respondent only served as a first point of contact in the banker/customer relationship between the Appellant and the 1st Respondent and did not act as the 1st Respondent’s agent in Nigeria, (iii) the acts complained of happened in the United Kingdom, and (iv) the High Court therefore lacked jurisdiction to adjudicate the claims against the 1st Respondent.
The Supreme Court reversed the decision of the Court of Appeal and held that the High Court had jurisdiction to entertain the claims against the 1st Respondent, notwithstanding that the 1st Respondent was not within the territorial jurisdiction of the High Court. The Supreme Court held that the jurisdiction of the High Court under the 1999 Constitution of Nigeria is not limited to parties within the territory of the Court or causes of action that arose within the territory of the Court, but extends to all causes and matters, except those expressly excluded by the Constitution. Beyond the jurisdictional point, the Supreme Court held that:
… it is not until the first Respondent received deposits from its customers or operated the accounts of its customers from the office of the first Respondent that it will be held to have an established place of business there. It is enough that it used the office of the second Respondent as an outpost for the purposes of soliciting for customers and for maintaining confidentiality and ease of communication and exchange of documents and as a point of contact for its customers. The office of the second Respondent constituted an established place of business of the first Respondent within jurisdiction.
The above excerpt, viewed in the context of the non-resident taxation framework under the NTA, could expose foreign banks with representative offices in Nigeria to serious tax risks.
Non-resident Taxation Framework Under the NTA
The NTA prescribes different rules for the taxation of income, profits, and gains derived by a non-resident person from Nigeria. This article focuses on the taxation of profits.
Under the NTA, the profits of a non-resident person will be taxable in Nigeria if the person carries on business in Nigeria through a permanent establishment (“PE”) or significant economic presence in Nigeria to which the profits are attributable. A non-resident person would be deemed to have PE in Nigeria if the person has a place from which its business is wholly or partly carried on in Nigeria or has an agent who acts on its behalf in Nigeria. In a PE context, a place means “… any location in Nigeria, whether owned, rented, leased or otherwise available for the use of the person, irrespective of the length of time it is used …”
Therefore, a foreign bank would be deemed to have a PE in Nigeria if it has a place of business or an agent who acts on its behalf in Nigeria.
Implications of Atoyebi
A foreign bank that does not have a banking license from the Central Bank of Nigeria is not eligible to carry on banking business in Nigeria. From a legal and regulatory perspective, the establishment of a representative office in Nigeria does not qualify a foreign bank to conduct banking business in Nigeria. Given the inability to carry on banking business in Nigeria, a representative office should ordinarily not be treated as a place of business of a foreign bank. In essence, a representative office should ordinarily not be treated as a PE of a foreign bank.
However, the Supreme Court’s characterisation of the Rep Office in Atoyebi as an established place of business of Barclays Bank means that notwithstanding the inability of foreign banks with representative offices in Nigeria to carry on banking business, a representative office nonetheless qualifies as a place of business of a foreign bank. The Supreme Court treated the activities of the Rep Office as those of Barclays Bank and, for this reason, considered the Rep Office as an outpost for soliciting customers and as a point of contact for customers.
The effect of this decision from a tax perspective is that a representative office of a foreign bank constitutes the foreign bank’s PE in Nigeria. The decision, therefore, exposes foreign banks to the risk of Nigerian taxation on profits derived from Nigeria through the activities of their representative offices.
This assessment, however, may not apply to a foreign bank that is resident in a country with which Nigeria has a Double Taxation Agreement (“DTA”). For foreign banks that are covered by a DTA, the PE question will be determined under the DTA and not under the NTA. DTAs generally define a PE as a fixed place of business or dependent agent of a non-resident person, but excludes from the definition, activities of a preparatory or auxiliary nature. Therefore, a non-resident person that has a fixed place of business in Nigeria will not be deemed to have a PE if the activities carried through the fixed place are of a preparatory or auxiliary character.
The typical activities of a representative office, such as those carried out by the Rep Office in Atoyebi, are auxiliary to the core banking business of the foreign bank. Therefore, even if a representative office is treated as a place of business of the foreign bank, it would not qualify as a PE under a DTA if it is not used by the foreign bank to carry on core banking business.
The repealed Companies Income Tax Act also had a similar exception. However, the exception was not reenacted under the NTA, and the mere fact that a representative office only carries on auxiliary activities may not ameliorate the tax exposure under the NTA.
Conclusion
Although Atoyebi is not a tax case, the pronouncements of the Supreme Court have serious tax implications for foreign banks with representative offices in Nigeria and could influence how the Nigeria Revenue Service treats the activities of representative offices. However, a representative office in Nigeria would not, in all cases, create a PE risk for a foreign bank and each case must be treated on its own merit. It is therefore crucial for foreign banks to seek professional guidance on the framework for non-resident taxation under the NTA with a view to identifying and addressing potential tax exposures.
Agbada S. Agbada, Managing Associate, Aluko & Oyebode
