BREAKING: President Tinubu takes decisive action on crude oil shipping back taxes, prevents tanker avoidance

BREAKING: President Tinubu takes decisive action on crude oil shipping back taxes, prevents tanker avoidance

President Bola Ahmed Tinubu has taken decisive actions to address the contentious issue of crude oil shipping back taxes, which has recently led tank owners to avoid operating in the country….CONTINUE READING

This information was disclosed by the President’s Special Adviser on Revenue, Zacchaeus Adedeji, during a press conference held at the state house on June 19. Adedeji revealed that an agreement had been reached to prevent vessel withdrawals in order to maintain an uninterrupted flow of crude oil products.

Furthermore, he mentioned that a technical committee had been established to tackle the challenges at hand. Emphasizing the committee’s role, Adedeji assured that no vessel would face arrest or detention while the committee works towards reconciling the back taxes.

These proactive measures taken by President Tinubu demonstrate a commitment to resolving the issue, ensuring the smooth operation of crude oil shipping, and preventing disruptions in the country’s oil sector.

The Backstory

On June 14, Nairametrics reported that some oil tanker owners were avoiding Nigeria due to the imposition of backdated taxes by the Federal Inland Revenue Service (FIRS). According to the report, several companies had received substantial tax demands, totaling millions of dollars, leading to a decision by at least two oil tanker owners to steer clear of Nigerian ports.

The FIRS had issued these demands for the period spanning from 2010 to 2019, with individual vessel claims ranging from $400,000 to $1.1 million. Meanwhile, in June 2021, the FIRS released an information circular where it had stated that there should be taxation of foreign ships or vessels lifting crude oil from Nigerian territorial waters. The document stated:

“One of the common features of the oil industry in Nigeria is that crude oil is often sold to foreign buyers.

“Free on Board” origin also sometimes phrased as “FOB shipping” or “FOB shipping point” means that the foreign or non-resident buyers are responsible for the arrangement and payment for vessels for the transportation of the crude oil from Nigeria.

“Usually, the shipping companies contracted for the transportation of the crude are non-residents, and payments to them are made by the non-resident buyers of the crude oil.

“Consequently, any vessel that carries crude oil, gas, petroleum products or any other item from Nigeria is liable to tax in Nigeria, irrespective of where or with whom the carriage contract was executed.”

What you should know

During his inauguration speech, President Bola Ahmed Tinubu pledged to address complaints of local and foreign investors regarding multiple taxation and anti-investment barriers. Meanwhile, operators across various sectors have highlighted the fact that excessive tax burdens discourage both local and foreign investors from doing business in the country….CONTINUE READING

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