Foreign shipping companies lifting Nigeria’s crude oil have been given December 31, 2023 to reconcile their tax records, the Federal Inland Revenue Service (FIRS) has said.
The FIRS Chairman, Zacch Adedeji,said the reconciliation of the records was part of the efforts to ensure strict compliance by the companies in their operations with the country’s tax laws.
Adedeji issued the deadline in Lagos at a workshop on taxation of non-resident shipping companies organised by FIRS in conjunction with Oil Producers Trade Section (OPTS) of the Lagos Chamber of Commerce and Industries (LCCI) on Monday.
The Chairman said the tax compliance exercises by FIRS on the activities of foreign shipping companies lifting hydrocarbons from Nigeria was part of measures aimed at widening the tax net in order to grow revenue for the government.
The Special Adviser on Media to the FIRS Chairman, Dare Adekanmbi, assured the international companies that the agency was only interested in ensuring compliance with the extant tax laws and not out to disrupt their operations.
Section 14 of the Companies Income Tax Act (CITA) 2004 (as amended) 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.
Adedeji reminded the companies his intervention earlier led to the six months grace period given to them to regularise their tax returns and reconcile their tax records before the December 31 deadline set by the FIRS.
He explained that the purpose of the workshop was to address challenges associated with tax compliance by the foreign companies and find a lasting solution to them.
“The Federal Government has set a target of increasing Nigeria’s tax-to-GDP ratio to 18% 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 expressed the concern 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.
He said the Service was aware of the economic importance of the sector and has no intention of disrupting their operations, rather the objective was to instil compliance with Nigerian tax laws.
“Please recall that as Special Adviser on Revenue I facilitated an intervention on this matter in June this year.
“This resulted in the six-months grace period granted to non-resident shipping companies to regularise their tax affairs and contribute their fair share to the revenue of the country. The grace period will expire at the end of this year.
“Furthermore, upon assuming the role of Executive Chairman of FIRS, I emphasized the importance of collaborating with stakeholders to address challenges associated with tax compliance.
“It is in this spirit that this workshop was organised with various stakeholders in the oil and gas industry and the maritime sector.
“I assure everyone here that FIRS, as an institution, is open to a transparent and fair resolution of assessment notices served on any taxpayer.
“Nevertheless, if required the Service is prepared, to enforce Nigerian tax laws without violating the rights of any taxpayer,” Adedeji said.
The workshop was attended by members of the International Association of Independent Tanker Owners (INTERTANKO), International Chamber of Shipping, Independent Petroleum Producers Group, government agencies and tax advisers, among others.