The Nigerian Government revealed that it plans to recover N553 billion in unremitted taxes owed by international petroleum shipping companies operating in Nigeria.
This was disclosed on Wednesday by the Director, of International Tax, Federal Inland Revenue Service (FIRS), Mr Abdullahi Aliyu during a summit organised by the Nigerian Chamber of Shipping (NCS) themed; “Sensitizing the Nigerian Maritime Industry on the New Tax Policy and Objectives”.
Aliyu added that said the sum was accrued from 2010 to 2019 and would be beneficial towards increasing government revenue.
Deficit and unremitted taxes
The FIRS chief noted that with Nigeria’s budget deficit of N11.34 trillion, the N553 billion unremitted taxes represents 5.03 per cent and would be an alternative to addressing Nigeria’s economic woes instead of borrowing.
He added that shipping companies involved in dry cargo activities in Nigeria and foreign airlines had been complying with the tax laws that most operators in the oil sector had neglected, he said:
- “The onus is on global businesses to understand the local laws and taxation in the countries where they transact business, and these specific laws have been in place in the nation for decades.
- “Nigerian taxes are more favourable to non-residents compared to indigenous companies, thereby creating an unfair business environment for local operators.”
Postponed clearance
The Assistant Director, Tax, FIRS, Mr Oluwole Oni, added that the FIRS had advertised the planned taxation exercise in December 2021 to prevent disruptions in the essential global shipping business. He said:
- “Non-resident vessels earn freight income from transportation services provided in transporting petroleum products (crude oil and gas products) from Nigeria to the agreed location, outside of Nigeria.
- “Irrespective of the commercial arrangement adopted by the non-resident vessels to lift crude oil from Nigeria, freight income attributable to Nigeria is taxable in line with the Companies Income Tax Act (CITA).
Oni added that Those who received the letters are expected to send in their responses which aren’t only about payment. The response can be an acknowledgement of receipt, a demand for clarification, or payment.
- “The first step to compliance is registration with FIRS and most operators are yet to register,” Oni said.
The Backstory
Recall Nairametrics reported earlier this month that President Bola Ahmed Tinubu took decisive actions to address the contentious issue of crude oil shipping back taxes, which has recently led tank owners to avoid operating in the country.
The President’s Special Adviser on Revenue, Zacchaeus Adedeji, revealed that an agreement had been reached to prevent vessel withdrawals in order to maintain an uninterrupted flow of crude oil products.
Furthermore, he mentioned that a technical committee had been established to tackle the challenges at hand. Emphasizing the committee’s role, Adedeji assured that no vessel would face arrest or detention while the committee works towards reconciling the back taxes.
These proactive measures taken by President Tinubu demonstrate a commitment to resolving the issue, ensuring the smooth operation of crude oil shipping, and preventing disruptions in the country’s oil sector.
On June 14, Nairametrics reported that some oil tanker owners were avoiding Nigeria due to the imposition of backdated taxes by the Federal Inland Revenue Service (FIRS). According to the report, several companies had received substantial tax demands, totalling millions of dollars, leading to a decision by at least two oil tanker owners to steer clear of Nigerian ports.