Revenue drive: $250bn global tax evasion worries FIRS, begins audit of foreign, domestic airlines next week

Worried by the report on the $250 billion global tax evasion by multinationals and OECD, the management of Federal Inland Revenue Services (FIRS) Wednesday assured House of Representatives of its determination to block leakages and recover unpaid taxes spanning over 10 years.

Speaking at the investigative public hearing held by the House of Representatives Adhoc Committee on ‘FIRS accounting procedure,’ Babatunde Fowler, FIRS chairman, alleged that Nigeria was being short-changed by the under-declaration of revenues and taxes by IOCs and other multinational companies.

“We tend to believe that companies, especially multinationals, would declare their figures properly. But organisations that deal with tax have estimated that well over $250 billion is lost every year in tax revenue from companies that file low revenue as returns.

“So, I think we just have to change our approach and assume that everyone is guilty until proven innocent when it comes to the issues of tax,” Fowler noted, just as he expressed reservation on the outcome of the Panama Paper scandal if eventually investigated by relevant authorities.

On efforts to track the unremitted taxes, the FIRS chairman disclosed that at the end of the self-assessment conducted by the Nigerian National Petroleum Corporation (NNPC), it admitted to owing $300 million and agreed to schedule mode of payment of outstanding liabilities.

Meanwhile, Michael Enyong, chairman of the adhoc committee, mandated the FIRS to initiate an audit of the accounts of all the international and domestic airlines and report back within two weeks.

They include: British Airways, KLM/Air France, Lufthansa, South African Airways, Ethiopian Airline, Delta Airlines, Egypt Air, Turkish Airline and Emirate Airlines, as well as Arik Air, Dana Air, Associated Airlines and Bellview Airlines.

On efforts made so far, Fowler noted that FIRS had initiated audit on the NNPC accounts with a view to getting the actual unremitted amount to FIRS at the end of June 2016, adding that the agency had also initiated discussion with five airlines on the recovery of outstanding tax liabilities.

“There’s an ongoing internal reorganisation focusing on staff training and retraining. We are also deploying a system where all outstanding taxes owed by companies are recalled using automated platform. Right now, many companies on the basis of that are doing self assessment and have promised to remit all outstanding Value Added Tax (VAT) owed for a couple of months.

“One of the key things we did to ramp up the revenue base when I was in Lagos was to do a comprehensive audit, and I believe if we apply the same method, we will achieve the same result and even more. I know that those I met on ground did their best to enhance the process and we are currently building on what they put on ground,” Fowler said.

On NNPC non-compliance with tax return, the FIRS boss said: “On the taxable profits of companies, I cannot give any specific information regarding the amount until the audit report for last year is ready for assessment.”

Worried by the development, the Committee summoned the minister of state for petroleum, Ibe Kachikwu to appear before it at its next week sitting.

Similarly, the Committee directed the Federal Ministry of Finance to provide approvals/presidential directives to waive of taxes on all imported petroleum products by the previous administration.

This was sequel to the presentation of D. B Oruagu, deputy comptroller general of Customs, who disclosed that the Service acted on a Presidential directive to waive taxes on petroleum products.

“Based on the mandate given to Customs to scrutinise all import making entries into Nigeria, and as far as Customs is concerned, all petroleum products imported into this country is duty free. We do not have authorisation to collect duty on them,” Oruagu said.

While ruling, the Committee directed FIRS chairman to submit lists of tax waivers and its beneficiaries, list of all taxable entities from 2007 till date; evidence of bank deduction from source from 2010 till date; details of outstanding payment by NNPC and other companies and explanations as to why withholding taxes were not returned as provided for in the nation’s statute book.

He said: “In the case of tax refund, the N7.5 billion released on 19th December, 2014, report arising from the committee’s investigation reveals that some of the said approved cases were not implemented as monies received were not paid to all those who were listed in the request.”