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FG targets N553bn from petroleum unremitted shipping taxes

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By Seun Ibiyemi

The Federal Government says it intends to recoup over N553 billion unremitted taxes from international petroleum shipping companies operating in Nigeria.

The Director, International Tax, Federal Inland Revenue Service (FIRS), Mr Abdullahi Aliyu, said that recouping the sum which accrued from 2010 to 2019 would help address the nation’s budget deficits.

Aliyu said with the country’s overall budget deficit of N11.34 trillion, the N553 billion unremitted taxes represents 5.03 per cent and would be an alternative to addressing Nigeria’s economic woes instead of borrowing.

He said this while speaking at a virtual summit organised by the Nigerian Chamber of Shipping (NCS) on Wednesday with the theme; “Sensitising the Nigerian Maritime Industry on the New Tax Policy and Objectives.”

Aliyu, however, noted that shipping companies involved in dry cargo activities in Nigeria and foreign airlines had been complying with the tax laws that most operators in the oil sector had neglected.

“The onus is on global businesses to understand the local laws and taxation in the countries where they transact business, and these specific laws have been in place in the nation for decades. “Nigerian taxes are more favourable to non-residents compared to indigenous companies, thereby creating an unfair business environment for local operators,” he said.

In his paper presentation, the Assistant Director, Tax, FIRS, Mr Oluwole Oni, pointed out that the agency had advertised the planned taxation exercise in December 2021 to prevent disruptions in the essential global shipping business.

“Non-resident vessels earn freight income from transportation services provided in transporting petroleum products (crude oil and gas products) from Nigeria to the agreed location, outside of Nigeria.

“Irrespective of the commercial arrangement adopted by the non-resident vessels to lift crude oil from Nigeria, freight income attributable to Nigeria is taxable in line with the Companies Income Tax Act (CITA),” he said.

Oni said that the FIRS had written officially to operators who owed taxes for the period between 2010 and 2019, adding that the companies were expected to send in their responses within 30 days.

“Those who received the letters are expected to send in their responses which aren’t only about payment. The response can be an acknowledgement of receipt, a demand for clarification, payment.

“The first step to compliance is registration with FIRS and most operators are yet to register,” Oni said.

The Senior Advisor for Shipping Policy at the ICS, Georgia Spencer-Rowland, stated that communication on tax regime was not properly carried out as most members of ICS were oblivious of tax framework.

She noted that members of ICS comprised over 80 per cent of the world’s merchant ships and 40 national ship-owners associations.

Oni, however, encouraged FIRS to clearly communicate in an official document, the period allotted as grace period for the tax implementation.

“Do these taxes affect inbound or outbound ships? Are the taxes payables on freight, income or profits? “Will ICS members as stakeholders be allowed to participate in the Presidential Technical Committee ahead of the implementation of these taxes?” Georgia asked.

Meanwhile, the Legal Counsel to INTERTANKO, Ms Selena Challacombe, said that the figures and volumes quoted by FIRS for taxation were not the actual figures in the transactions carried out by INTERTANKO members.

Challacombe said that there could be challenges in recouping taxes with the figures for 2010 to 2019 as ship charterers are unlikely to provide the vital information seen as germane to their businesses.

She said the situation should not be termed tax evasion when the alleged violators had not profited from the negligence of taxes they never knew existed.

She added that Australia had a similar law enacted since 1936 and members of INTERTANKO factored in the taxes when undertaking contracts for Australia.

In his welcome remarks, the President of NCS, Mr Aminu Umar, stressed the need for collaboration among stakeholders and government agencies for a smooth implementation of taxation.

Umar said the chamber was willing to partner with government to collect revenue for national sustainability, adding that there must be collective input to rightly shape the shipping sector and encourage investments.

He described the Presidential Technical Committee for the implementation of taxation as an ideal avenue for collaborations between local and global shipping operators and government agencies to advance the nation’s maritime sector.

Reports that FIRS draws its legal backing from Section 14(1) of the Companies Income Tax Act (CITA), titled “Companies engaged in shipping or air transport”.

The act states: “Where a company other than a Nigerian company carries on the business of transport by sea or air, and any ship or aircraft owned or chartered by it calls at any port or airport in Nigeria, its profit or loss to be deemed to be derived from Nigeria shall be the full profits or loss arising from the carriage of passengers, mails, livestock or goods shipped or loaded into an aircraft in Nigeria.”

Stakeholders at the summit, the International Association of Independent Tanker Owners (INTERTANKO), ICS, indigenous ship-owners, tax experts, among others called for more clarity and time for operators to understand the Nigerian tax regime.

The global bodies also claimed that their members were not aware of the tax provisions and public notice given by FIRS, and expressed fears on Nigeria’s insistence on recouping taxes on previous transactions between 2010 and 2019.

Other dignitaries at the summit included the President of Ship Owners Association of Nigeria (SOAN), Dr Mkgeorge Onyung; Vice President of NCS, Ify Akerele; President, Nigerian Shipowners Association (NISA), Mr Sola Adewumi; among others.

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Blue Economy Ministry to spend N1.35bn on foreign, local trips, vehicle

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The Federal Ministry of Marine and Blue Economy will spend a whopping N1 billion on the purchase of vehicles in 2024.

The ministry will also spend a total of N35 million on local and foreign travel in the same year under review.

According to the 2024 Appropriation Act signed into law by President Bola Tinubu, the ministry will spend N10 million on local travel and transport: training; N15 million on local travel and transport: others and N10 million on international travel and transport among others.

However, speaking on the appropriation, the President, National Association of Managing Director of Licensed Customs Agents (NCMDLCA), Lucky Amiwero, said the money for the purchase of vehicles for the ministry should be channelled towards port rehabilitation.

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Global growth will hold steady at 3.2% in 2024, 2025 — IMF

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The International Monetary Fund (IMF) says global growth in 2024 and 2025 is projected to hold steady at 3.2 per cent, at the same pace as in 2023.

This is according to the IMF’s latest World Economic Outlook (WEO) Update Report for April 2024: “Steady But Slow: Resilience Amid Divergence” released on Tuesday in Washington DC.

The report said the forecast for 2024 was revised up by 0.1 percentage points from the January 2024 WEO update and by 0.3 percentage points from the October 2023 WEO.

It said the pace of expansion was low by historical standards, owing to both near-term factors, such as still-high borrowing costs and withdrawal of fiscal support.

“Also by longer-term effects from the COVID-19 pandemic and Russia’s invasion of Ukraine; weak growth in productivity; and increasing geoeconomic fragmentation.”

The report said there would be a slight acceleration for advanced economies, where growth was expected to rise from 1.6 percent in 2023 to 1.7 percent in 2024 and 1.8 percent in 2025.

It said emerging markets and developing economies would witness a modest slowdown from 4.3 percent in 2023 to 4.2 percent in both 2024 and 2025.

“The forecast for global growth five years from now at 3.1 per cent is at its lowest in decades.”

The report showed growth in Sub-Saharan Africa was projected at 3.8 in 2024 and 4.0 in 2025.

It revealed that economic growth in Nigeria was projected at 3.3 in 2024 and 3.0 in 2025.

The report said global headline inflation was expected to fall from an annual average of 6.8 per cent in 2023 to 5.9 percent in 2024 and 4.5 percent in 2025, with advanced economies returning to their inflation targets sooner than emerging market and developing economies.

“The pace of convergence toward higher living standards for middle-and lower-income countries has slowed, implying persistence in global economic disparities.”

It said on the downside, new price spikes stemming from geopolitical tensions, the war in Ukraine, and the conflict in Gaza and Israel, could raise interest rate expectations and reduce asset prices.

“This is along with persistent core inflation where labor markets are still right.

“A divergence in disinflation speeds among major economies could also cause currency movements that put financial sectors under pressure.

“Amid high government debt in many economies, a disruptive turn to tax hikes and spending cuts could weaken activity, erode confidence, and sap support for reform and spending to reduce risks from climate change.

“Geoeconomic fragmentation could intensify, with higher barriers to the flow of goods, capital, and people implying a supply-side slowdown.”

It said on the upside, that looser fiscal policy than necessary and assumed in projections could raise economic activity in the short term, although risking more costly policy adjustments later on.

“Inflation could fall faster than expected amid further gains in labor force participation, allowing central banks to bring easing plans forward.

“Artificial intelligence and stronger structural reforms than anticipated could spur productivity.”

The report said as the global economy approaches a soft landing, the near-term priority for central banks was to ensure that inflation touched down smoothly.

“They should do this by neither easing policies prematurely nor delaying too long and causing target undershoots.

“At the same time, as central banks take a less restrictive stance, a renewed focus on implementing medium-term fiscal consolidation to rebuild room for budgetary maneuver and priority investments, and to ensure debt sustainability, is in order.”

The report said cross-country differences called for tailored policy responses.

It said intensifying supply-enhancing reforms would facilitate inflation and debt reduction, allow economies to increase growth toward the higher pre-pandemic era average, and accelerate convergence toward higher income levels.

“Multilateral cooperation is needed to limit the costs and risks of geoeconomic fragmentation and climate change, speed the transition to green energy, and facilitate debt restructuring.”

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NCAA suspends licence of three private jet owners

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Nigeria Civil Aviation Authority (NCAA) has suspended the licence of three Permit for Non-Commercial Flight (PNCF), otherwise known as private jet owners, over alleged failure to comply with regulatory requirements.

Acting Director-General of NCAA, Capt. Chris Najomo, disclosed this to journalists on Tuesday in Lagos.

Najomo said that after issuing a stern warning to the PNCFs in March, the authority deployed its men to monitor activities of private jet owners at airport terminals across the country.

He said that consequent upon the heightened surveillance, three private operators were found to have violated the annexure provisions of their PNCF and Part 9114 of the Nigeria Civil Aviation Regulations, 2023.

Najomo further stated that the NCAA would be carrying out a re-evaluation of regulatory compliance requirements of all PNCFs owners within the next 72 hours.

This, he said, was in line with the authority’s zero tolerance for violations of regulations.

“In line with our zero tolerance for violation of regulations, the authority has suspended the PNCF of these operators.

“To further sanitise the general aviation sector, I have directed that a re-evaluation of all holders of PNCF be carried out on or before April 19, to ascertain compliance with regulatory requirements.

“All PNCF holders will be required to submit relevant documents to the authority within the next 72 hours,” he said.

Najomo recalled that in 2023, the use of private jets for commercial purposes had gotten the attention of the Minister of Aviation and Aerospace Development, Mr Festus Keyamo (SAN), who issued marching orders for cessation of such acts.

He said that in March, NCAA issued a stern warning to holders of the permit for non-commercial flights, PNCF, against engaging in the carriage of passenger cargo or mail for hire and reward.

Najomo said that the riot act was also directed at existing Air Operator Certificate (AOC) holders who utilised aircraft listed on their PNCF for commercial charter operations.

“It must be emphasised that only the aircraft listed in the Operation Specifications of the AOC are authorised to be used in the provision of such charter services.

“Any of those AOC holders who wish to use the aircraft for charter operations must apply to the NCAA to delist the affected aircraft from the PNCF and include it into the AOC operations specification.

“NCAA wishes to reiterate to the travelling public not to patronise any airline charter operator who does not hold a valid AOC issued by the NCAA, when they wish to procure charter operation services,” he said.

The NCAA boss, thereafter, encouraged legitimate players in the aviation industry to promptly report such illegal activities to the authority for necessary action.

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