Aminu Umar, president of the Nigerian Chamber of Shipping, says 30% company income tax levied on members of the International Association of Independent Tanker Owners will harm Federal Government’s revenue.
Umar told Punch Newspaper in an interview the tax rules might not have an impact on refined petroleum products, but it would diminish the profit Nigeria could have earned from selling crude oil.
“It does not affect the people who import refined petroleum products. It will only affect the people that export crude oil. It will not lead to any fuel scarcity,” he said.
He said the tax may force buyers to reduce their spend on the product and divert the balance to shipping.
“The only thing is that it will affect or reduce the money the Federal Government is going to spend on crude exportation. Because the person that is going to buy will rather reduce the money he or she will pay on the crude to recover for the shipping cost.
A source from the Depot and Petroleum Marketers Association said that the tax would have an impact on the price of imported fuel.
“It will reduce the money Nigeria would have made from crude oil sales. It will reduce the profit the government would have made because the buyers will factor in the price. It will increase the cost of freight coming to Nigeria,” Punch quoted the source saying.
Read also: Tax exemption keeps Nigeria’s petrol price lower than African peers
The source further disclosed that it was a component of the market essentials that were influencing the local pump price.
“Marketers do their best to negotiate the best freight on vessels. However, this tax would be reflected in the cost of fuel imports, especially if it is dollar denominated. When we speak of market fundamentals influencing the local pump price, this is an example of such because the vessel owner will pass the cost (tax increase) to the charterer who, in turn, spreads the same on the fuel cost, thereby increasing the landing cost,” he unveiled.
The Federal Inland Revenue Service (FIRS) has sent a letter to members of the International Association of Independent Tanker Owners (INTERTANKO) concerning claimed freight liabilities linked to vessels visiting Nigerian Ports for wet cargoes since 2010.
The letter mentioned a penalty fee of 10% and an interest rate of 19%.
In a written statement provided during a webinar arranged by the Nigerian Chamber of Shipping, INTERTANKO stated that it had reached out to the FIRS to obtain further details on the calculation approach for the freight tax and to inquire about any comparable demands made to charterers.
The members of INTERTANKO, shipowners, and the Nigerian Maritime Administration and Safety Agency signed a communiqué which stated that FIRS had not provided a detailed breakdown of calculations specifying the exact cargo/freight amounts per voyage.
“Non-payment of the tax assessments is considered tax evasion and a criminal offence by FIRS. The association has contacted FIRS to request further specific information on the calculation methodology for the freight tax and to inquire about similar demands issued to charterers.” INTERTANKO said.
Join BusinessDay whatsapp Channel, to stay up to date
Open In Whatsapp
