TheCable

Zacch Adedeji, chairman of the Federal Inland Revenue Service (FIRS), has asked foreign shipping companies lifting crude oil from Nigeria to adhere to the country’s tax laws.

Adedeji spoke on Monday at a workshop on taxation of non-resident shipping companies in Lagos, according to a statement by Dare Adekanmbi, his special adviser on media.

The tax agency organised the workshop in conjunction with the Oil Producers Trade Section (OPTS) — a group within the Lagos Chamber of Commerce and Industry (LCCI).

On October 23, FIRS embarked on a nationwide value-added tax (VAT) and withholding tax (WHT) compliance monitoring exercise for all taxable persons in the country.

Adedeji, in the statement on Monday, said the tax compliance exercise is part of a broader strategy to widen the tax net and boost government revenue.

The FIRS chairman also said the international shipping companies have up to December 31, 2023, to reconcile their books with the agency.

He said FIRS is only interested in ensuring compliance with 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 was quoted as saying.

“The federal government has set a target of increasing Nigeria’s tax to GDP ratio to 18 percent 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.

“I wish to state that the Service is aware of the economic importance of the sector and has no intention of disrupting operations, rather the objective is to instil compliance with Nigerian tax laws.”

He said the six-month grace period granted to non-resident shipping companies to regularise their tax affairs and contribute their share to the country’s revenue would expire at the end of this year.

Speaking on the essence of the workshop, the chairman said the aim was to address challenges associated with tax compliance by foreign companies and find a lasting solution.

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.