Zacch Adedeji, the head of the Federal Inland Revenue Service (FIRS), has ordered foreign businesses that export crude oil from Nigeria to make sure that all tax regulations in the nation are strictly adhered to in their business dealings.
Adedeji delivered the keynote address on Monday at a workshop on the taxation of non-resident shipping businesses held in Lagos by FIRS and the Oil Producers Trade Section (OPTS).
He stated that as part of efforts to expand the tax net and increase government income, FIRS started a tax compliance exercise on the operations of international shipping firms that were removing hydrocarbons from Nigeria.
According to a statement released by his Special Adviser on Media, Dare Adekanmbi, the chairman of the FIRS gave the foreign corporations the assurance that the agency was not seeking to disrupt their activities, but rather only concerned in ensuring compliance with existing tax regulations.
Foreign firms operating in Nigeria’s shipping and aviation industries are required under Section 14 of the firms Income Tax Act (CITA) 2004 (as modified) to file tax reports in order to maintain their commercial activities there.
Adedeji, who served as President Bola Tinubu’s Special Advisor on Revenue before being named FIRS chairman, reminded the businesses of how his earlier intervention had resulted in the six-month grace period that was granted to them to regularize their tax filings.
The deadline for foreign shipping businesses to align their records with FIRS is December 31st of this year.
He clarified that the goal of the workshop was to address issues related to foreign corporations’ tax compliance and come up with a long-term solution.
“Within the following three years, the Federal Government of Nigeria intends to raise the tax to GDP ratio to 18%.
The intention is to do this via widening the tax net rather than by enacting new levies. This aim of expanding the tax net is consistent with the compliance effort conducted on multinational shipping corporations that remove crude oil from Nigeria.
“I’m confident that every foreign shipping company we got in touch with understands how important it is to abide by the tax regulations in each of the locations in which they do business.
I thus implore the foreign shipping firms who are not adhering to Nigerian tax legislation to do so right now.
“The Service has taken note of the concerns expressed by stakeholders in the maritime and oil and gas sectors over the tax compliance audit that was conducted on foreign shipping firms that were removing crude oil from Nigeria.
“I would want to clarify that the Service is cognizant of the sector’s economic significance and does not intend to interfere with activities; rather, the goal is to enforce adherence to Nigerian tax regulations.
“Recall that in June of this year, in my capacity as Special Adviser on Revenue, I organized an intervention on this subject.
As a result, non-resident shipping businesses were given a six-month grace period to settle their tax obligations and provide their due share of national revenue contributions. By year’s end, the grace period will come to an end.
Furthermore, I stressed the value of working with stakeholders to address issues related to tax compliance when I took on the position of Executive Chairman of FIRS.
This workshop, which includes a number of players from the oil and gas and marine sectors, has been organized in such spirit.
“Let me tell everyone in this room that FIRS is open to a fair and transparent settlement of assessment notifications delivered to any taxpayer.
Nevertheless, Adedeji stated, “the Service is prepared, if required, to enforce Nigerian tax laws without violating any taxpayer’s rights.”
Participants at the session included tax advisors, government agencies, the Independent Petroleum Producers Group, the International Chamber of Shipping, and the International Association of Independent Tanker Owners (INTERTANKO).