Nigeria loses N1.8tn in tax relief to firms —Reps

Speaker of the House of Representatives, Yakubu Dogara
| credits: http://www.nta.ng

The House of Representatives said on Tuesday that the Federal Government had lost about N1.850tn revenue in tax relief granted to companies enjoying “pioneer status” incentives in the country.

The House noted that the loss came from disregard for extant laws on the policy by the Nigerian Investments Promotion Council in the past four years.

An All Progressives Congress lawmaker from Benue State, Mr. Herman Hembe, while moving a motion on the issue, called for an investigation into the details of the abuses.

He stated, “Section 1 of the Investment Development (Income Tax Relief) Act, 2014, and the Companies Income Tax vest powers on the President to grant pioneer status or tax relief as incentives to companies designated as pioneer industries.

“This is to encourage and stimulate growth in the under-explored sectors that are considered important to the growth of the economy.”

He added that the laws provided that such a relief “shall be for a period of three years from the first day of production by the company with an option for extension for another year or two years.”

However, Hembe informed the House that in the last six years, the NIPC had issued pioneer status certificates to companies not envisaged by law.

He added that among such beneficiaries not covered by law were petroleum exploration and production companies.

Hembe added that the council also “granted unwholesome extensions and even further granted the status to companies that had previously benefited from the grant.”

Hembe also told the House that the NIPC went further to grant pioneer status “retrospectively” to some companies with the result that the Federal Government had to refund taxes already paid by such companies.

“This has cost the Federal Government about N1.850tn in revenues,” he added.

Members voted massively for the motion, passing a resolution to investigate the alleged abuses of the pioneer status policy in the past six years.

The House also resolved to look into the Joint Venture Operations between the Nigerian National Petroleum Corporation and oil companies with reference to “leakages” in revenue due to the Federal Government in the past seven years.

The House observed that both the Federal Government, through the NNPC and oil firms, had an agreed formula on the lifting of oil and sharing of accrued revenues.

However, Mr. Nicholas Ossai, who moved the motion on the subject, complained that there were revenue windows either unaccounted for or not paid into the distribution pool by oil companies.

The motion partly read, “The House is concerned that income from such sources as sale of assets, marine transportation, haulage or pipeline transportation, among others, which form part of the JVOs, is unaccounted for and not usually paid into the distribution pool by the oil companies, which are the operators of the JVs.

“These sources of JV income amount to billions of naira or millions of dollars (particularly haulage or pipeline) as the case may be;

“The operator-company net off these incomes against expenses (already settled), allegedly in collusion with officials of the NNPC to avoid remittance of the income to the Federation Account.”

In a separate resolution, the House summoned the Permanent Secretary of the Ministry of Petroleum Resources, Taiye Haruna, over Nigeria’s absence at the meeting of the Zero Routine Gas Flaring by 2030, held on April 17 in Washington D.C.

According to Mr. Uchechukwu Nnam-Obi, who brought the matter to the attention of the House, the meeting was launched by the Secretary-General of the United Nations, Mr. Ban Ki-Moon.

The House wondered why Nigeria, a country “faced with severe challenges arising from unbridled gas flaring” by oil majors, did not attend the meeting.

Lawmakers at the session, which was presided over by the Speaker, Mr. Yakubu Dogara, passed all the resolutions in a majority voice vote.