The House of Representatives on Friday expressed optimism that key revenue generating agencies including: Federal Inland Revenue Service (FIRS), Nigeria Customs Service (NCS), Nigerian National Petroleum Corporation (NNPC) have the capacity to generate revenue if all loopholes are blocked.
Chairman, House Committee on Public Accounts, Hon. Oluwole Oke gave the assurance during the investigative hearing into the audit report from the office of the Auditor General of the Federation on the dwindling revenue accrued into the Federation Account over the past few years.
While stressing the need for heads of various MDAs to synergize with the parliament while observing the rule of law and separation of powers, Hon. Oke faulted the indiscriminate approval for tax waivers being granted to over private companies and the connivance with some companies to undermine tax authorities.
“The Auditor General, yes belatedly, laid its reports in respect of 2014, 2015, 2016, 2017 and 2018 and he observed consistently that the parliament should not just look at the projections of FIRS, Nigeria Customs Service, DPR, NNPC, Mining Cadastral when it comes to MTEF viz-a-viz budget formulation; that we should just accept it but the parliament should look into it because the revenue accruable to the federation has continued to dwindle.
“It is in response to the observation of the Auditor General in 2014, maintained in 2015 and repeated in 2016, that we called Nigeria Customs, FIRS, DPR, NNPC and Mining Cadastral to find out the claim of Auditor General. If it is true, what are the problems and causes? Your minister, Minister of Finance, further attested to this.
“When Nigerians were worried about the level of our borrowings, she submitted that the debt-GDP ratio was normal and that we had not gone beyond the threshold but that the problem we have in this country is revenue problem. That was the submission of the honourable Minister of Finance. And if that is the case, should we, your representatives, fold our hands and watch helplessly the continued leakage of revenue in this country?
“It was on that basis that we invited Customs, your good self (FIRS), DPR, NNPC and Mining Cadastral. Nigeria Customs appeared and laid their position and observed that truly, they could collect more (revenue) but if they have an instrument issued by Ministry of Finance and Budget Office granting a duty payer duty exemption; that what can they do than to obey.
“These duty exemptions, are they well formulated on the principles of law? These are the issues for the parliament as lawmakers to look into. Are there facts that the ministry, while granting this waiver, overlooked? Maybe by error of omission or commission, it is the duty of the parliament to oversight, to find out.
“While I must commend Committee on Finance for doing their job, the Auditor General has brought this matter before this constitutional committee. So, FIRS and the parliament should work in synergy to ensure that we block all the loopholes in the tax arena.
“The taxpayers are deploying all sorts of schemes to undermine you. I say that on good authority as a tax lawyer. The line between tax evasion and tax avoidance is too thin – very thin – and you have to be observant. The tax payers are undermining you, deploying all sorts of schemes including transfer pricing and non-disclosure. Even, some agencies of government that ought to have worked in your best interest are also collaborating with them to undermine you.
“If not so, on what basis will the NNPC issue pioneer status to a company after exhausting the first three years and the second two years, and they came with another name and you again granted them pioneer status using the same personnel, the same assets and the same premises to cheat this country?
“And when we see all these things, should we fold our hands? The Auditor General came up with observations and queries in 2014, 2015, 2016 and 2017.
“In my opinion, the Auditor General has discharged his responsibilities. And he gave us five years’ projections to show that both Customs and FIRS are not collecting the right revenue they should collect. How do we cure this?
“Nigeria Customs gave a list of over 600,000 importers but we cannot invite all the over 600,000 importers because some of them are just individuals who imported personal items.
“To invite everybody, it will cost this committee N1.2 billion. we don’t have that money, so we had to devise methods to ascertain the critical operators who deploy all sorts of schemes on a large scale to undermine FIRS and Nigeria Customs. And in the process, they listed Indorama.
“As a matter of fact, Customs was not aware that Indorama has other subsidiaries. But for fair hearing, we wrote to Indorama: appear before this committee, this is the position of Nigeria Customs; can we have the records of the duties you have paid and the items?
“In the process, we saw evidence of duty waiver. If a company is entitled to duty waiver, so be it in the eye of law; we have no grudge against that. What did you import? Did you import items that needed to be sold or assets for your production? Give us the details of items you enjoyed duty waiver on.
“These items that you enjoyed duty waiver on, you also took them to the Federal Ministry of Industry to also enjoy capital allowances relief. You also obtained pioneer status. And it is the documents issued to them that they took to FIRS. So, if a taxpayer comes to FIRS or goes to Customs and presents duty waiver, what can Customs do? What can FIRS do?
“In the UK, both the FIRS and Customs are under one body, so on a real-time basis the revenue (agency) can see what the Customs is doing and there is exchange of information on a daily basis. So, Indorama also got capital allowances acceptable from Industry.
“We have invited Ministry of Industry; they were supposed to be here but they pleaded that they wanted both the minister and permanent secretary to be here, so they have asked to come on the 17th, because they issued the document presented to FIRS to avoid taxation.
“We wrote FIRS to give us the detailed records of this company and all the documents given to us are not clear, hence our ruling that FIRS should furnish the original tax file of this company. Painstakingly for three nights, I have examined this file. I have examined this file that you laid.
In his response, FIRS Chairman, Mr. Muhammad Nami, who dismissed the allegation on tax waivers granted to The firms are Indorama Petrochemical, Indorama Fertilizer and Petrochemical Limited and OIS Indorama Eleme Port-Harcourt, argued that the Service did not grant any tax waivers to any local or foreign investors in the country as the FIRS Act did not empower it to grant such tax breaks.
Mr. Nami said: “The FIRS does not have the power or responsibility of facilitating or implementing incentives to local investors or investors coming through the Foreign Direct Investment platform, which is the sole prerogative of the Nigerian Investment Promotion Commission (NIPC).”
Nami pointed out that “the investigation of the three foreign firms, Indorama Petrochemical, Indorama Fertilizer and Petrochemical Ltd and OIS Indorama Eleme Port-Harcourt, started way back in 2015.
“The committee in charge of the investigation has consistently been furnished with all required documents by the FIRS.”
He further stated that the three companies “have been variously granted pioneer status between December 15th, 1997 to 2016 for the Indorama Petrochemical Ltd and between 2017 – 2020 for the Indorama Fertilizer and Chemicals Ltd respectively.”
According to him “upon expiration of the pioneer period and conclusion of post pioneer audit, the Indorama Petrochemical Ltd company’s tax file was returned to the Large Tax Office (LTO) Port Harcourt. Thus far, the company has filed its annual returns up to 31st December 2019 with relevant self-assessment and paid its attendant liabilities.”
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