The Nigerian government has unveiled plans to recover a total of N553 billion in unpaid taxes from international petroleum shipping companies operating in the country. This announcement was made during a summit organized by the Nigerian Chamber of Shipping, focused on raising awareness about the new tax policy and objectives within the Nigerian maritime industry.
Mr. Abdullahi Aliyu, the Director of International Tax at the Federal Inland Revenue Service (FIRS), revealed that the accumulated amount dates back to the period between 2010 and 2019. The recovery of these unremitted taxes is expected to contribute significantly to increasing government revenue.
In light of Nigeria’s substantial budget deficit of N11.34 trillion, Aliyu emphasized that the N553 billion owed by these companies represents 5.03 percent of the deficit. Therefore, recovering these unpaid taxes could serve as an alternative solution to address the country’s economic challenges, reducing the need for further borrowing.
Furthermore, Aliyu pointed out that while shipping companies involved in dry cargo activities and foreign airlines have been compliant with tax regulations, many operators in the oil sector have neglected their tax obligations. This highlights the importance of ensuring tax compliance across all sectors for a fair and balanced revenue system.
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 favorable to non-residents compared to indigenous companies, thereby creating an unfair business environment for local operators.”
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).