The House of Representatives ad hoc committee investigating the structure and accountability of joint venture business and production sharing contracts of NNPC has indicted several oil companies for alleged tax evasion.
The committee’s report said the Federal Inland Revenue Service chairman, Mamman Nami, should be arrested and prosecuted for aiding tax evasion by oil companies.
According to the report, the investigation by the committee began in 1991 to date with tax evasion running into trillions of naira.
The report is expected to be presented before lawmakers this week.
The ad hoc committee investigation, chaired by Abubakar Fulata, revealed that the JVs and PSCs of NNPC sold Nigerian oil at the lowest cost to their subsidiaries in a tax haven.
The committee alleged that the company subsequently sold the same oil to other buyers at full price while inflating the cost of their Nigerian production operations and underreported the volume of oil they produced.
Apart from outright circumvention of the Nigerian tax laws, the committee said the action was an abusive and contrived tax avoidance scheme to minimize their tax liability.
The ad hoc committee is asking the house to adopt the recommendations to bring sanity to Nigeria’s oil and gas operation. This, according to the committee report, would be a greater benefit to the citizens.
The committee report also showed that all international and national oil companies who enjoyed capital allowance in Nigeria had no Certificate of Acceptance of Fixed Asset (CAFA) as the Industrial Inspectorate Act prescribes.
The report, however, said all oil companies that benefited from capital allowance without obtaining CAFA as prescribed by the Industrial Inspectorate Act be made to refund all the monies to the government treasury.
On November 1, 2022, the house ad hoc committee investigating the structure and accountability of the JV businesses and production sharing contracts of the Nigerian National Petroleum Limited began probing oil companies accused of tax evasion.
The probe was against the backdrop of alleged tax evasion by some oil companies operating in Nigeria, which led to the constitution of the committee by Speaker Femi Gbajabiamila.
Mr Fulata, at a meeting with stakeholders in the oil and gas industry, cited relevant sections of the 1999 Constitution as amended.
“This committee is relying on sections 88 and 89 of the 1999 Constitution of the Federal Republic of Nigeria as amended, and we are asking heads of agencies who failed to forward their submissions to do so,” the legislator explained. “This committee cannot fail in its mandate, and we might resort to the use of police and other security agencies to compel heads of agencies to do so.”
Mr Fulata decried that tax evasion by oil companies, particularly the international oil companies, has negatively affected the revenue for the country, expressing disappointment that several letters of invitation sent out to some organisations were not responded to, revealing that those who responded did so shabbily.
On November 16, 2022, the house committee summoned the chairman of the FIRS.
Mr Nami did not show up.
Members of the committee did not permit representatives of FIRS, a director and a special assistant to make a presentation as they insisted that only the chairman is expected to speak on behalf of FIRS.
The FIRS representatives told the committee that the tax agency did not have access to the stock certificate of crude oil being lifted.
The representatives claimed they only relied on the invoice produced and presented by the oil companies.
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