Trafigura lifts 12.5m metric tonnes of crude without paying tax in 4 yrs — FIRS

…ActionAid says Nigeria loses N577 billion annually to tax breaks 

FOLLOWING the revelation by the Federal Inland Revenue Service that Trafigura lifted 12.5 million metric tonnes of crude oil out of Nigeria between 2011 and 2014 without paying tax, the House of Representatives has directed the FIRS to compute the volume of crude oil trading by marketers operating in Nigeria for appropriate tax assessment.

The House Adhoc Committee investigating the refined product exchange agreement contracts between the Nigerian National Petroleum Corporation and crude trading firms gave this directive at its sitting.

The swap arrangement involved the exchange of crude oil for refined petroleum products in which the corporation gave out part of its 445,000 barrels daily share of crude oil to the trading companies.

The firm, the PPMC noted, did not pay any tax to the Federal Government on the excuse that it was not registered in Nigeria. The FIRS confirmed to the committee, which is chaired by Hon. Zakari Mohammed, that Trafigura had never made declarations for tax assessment.

The committee also discovered that while some crude traders like Aiteo, Ontario and Taleveras paid taxes, they still had balances to remit to the Federal Government. The outstanding for Taleveras is N859.9m; Aiteo, N256m; and Ontario, N11.2m.

Mr. James Joseph, who appeared before the committee with the designation, Managing Director, Trafigura West Africa, pointedly told the committee that the firm was not bound by Nigerian tax laws. He claimed that the firm strictly did offshore business and could not be taxed in Nigeria because it was not registered in the country.

The committee dismissed this argument on the grounds that Trafigura at least earned income on logistics services it provided in Nigeria, which were taxable.

Mohammed said, “The PPMC should immediately provide all documents on crude oil lifting by Trafigura to the FIRS for tax assessment. I am sure that there are aspects of our tax laws that capture the operations of firms like Trafigura.”

The Nigeria Customs Service also informed the committee that though Trafigura lifted the crude in exchange for refined products, there was no evidence in its records that the firm shipped products to Nigeria under the swap arrangement.

But Trafigura countered the position of the NCS, saying that it delivered refined products. It, however, admitted that there was an outstanding balance of products worth $2.5m to be returned to Nigeria.

Meanwhile ActionAid has emphasized the need for oil and gas companies as well as other multinational companies to open their finances for scrutiny, through the publication of their financial and declaring their top and bottom line figures.

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Ms. Ojobo Atuluku, Country Director of ActionAid Nigeria lamented that developing countries are losing a minimum of $138 billion annually to tax breaks, with Nigeria losing an estimated $2.9 billion or N577 billion annually as a result of tax incentives.

She faulted the assumption that granting tax relief to multinationals and large corporations would promote investments that attract capital and contribute to job creation, stating that instead, multinational developmental financial institutions are now warning countries against excessive tax incentives.