The Federal Inland Revenue Service (FIRS) has tasked foreign shipping companies lifting crude oil from Nigeria with strict compliance and respect for existing tax laws in their operations.
According to the FIRS Executive Chairman, Zacch Adedeji, the tax compliance exercise on the activities of foreign shipping companies lifting hydrocarbons from the country is part of measures to widen the tax net and ultimately grow the government revenue profile.
Adedeji, who delivered the charge at a workshop on taxation of non-resident shipping companies organised by FIRS, in conjunction with the Oil Producers Trade Section (OPTS) in Lagos, assured the international companies that the Service is not out to disrupt their operations, but only interested in ensuring compliance with extant tax laws in the country.
However, the FIRS Chairman cautioned that if the need arises, the Service will not hesitate to enforce Nigerian tax laws “without violating the rights of any taxpayer.”
A statement by his Media aide, Dare Adekanmbi, quoted Adedeji as assuring that “FIRS, as an institution, is open to a transparent and fair resolution of assessment notices served on any taxpayer.”
The tax compliance directive is in line with Section 14 of the Companies Income Tax Act (CITA) 2004 (as amended) which makes it mandatory for foreign companies engaging in shipping and air transport operations in Nigeria to file tax returns to continue to carry out their businesses within the country.
The compliance exercise on international shipping companies lifting crude oil from Nigeria is in line with this strategy of broadening the tax net.
While reminding them of his earlier intervention that led to the six-month grace period to regularise their tax returns, Adedeji said the affected foreign shipping outfits have up to December 31, 2023, to reconcile their books with FIRS, stressing that the workshop was packaged to address challenges associated with tax compliance by the foreign companies and find a lasting solution.
He also said: “The Federal Government has set a target of increasing Nigeria’s tax-to-GDP ratio to 18 per cent within the next three years. The goal is to achieve this without imposing additional taxes but by broadening the tax net.
“The compliance exercise on international shipping companies lifting crude oil from Nigeria is in line with this strategy of broadening the tax net.
“I am sure all the international shipping companies that we contacted are aware of the importance of complying with tax laws in the various jurisdictions they operate. Therefore, I urge the international shipping companies that are not complying with Nigerian tax laws to begin to do so immediately.
“The Service has noted the concerns raised by stakeholders in the oil and gas industry and the maritime sector regarding the tax compliance exercise initiated on international shipping companies lifting crude oil from Nigeria.”
Further noting that the Service is aware of the economic importance of the sector and has no intention of disrupting operations, Adedeji, who was Special Adviser on Revenue to President Bola Tinubu, before his appointment as FIRS Chairman said the objective is to instil compliance with Nigerian tax laws.
Emphasizing the importance of collaborating with stakeholders to address challenges associated with tax compliance, he said: “It is in this spirit that this workshop has been organised with various stakeholders in the oil and gas industry and the maritime sector.”
The workshop also featured participants from the International Association of Independent Tanker Owners (INTERTANKO), the International Chamber of Shipping, the Independent Petroleum Producers Group, government agencies, and tax advisers among others.
