The revelation last week that as many as 77 oil and gas companies operating in the country owe the government a staggering $ 6.48 billion (around 2.3 billion naira) in taxes came as a shock to all Nigerians. well-meaning. In this era of a global movement to get all people – humans and businesses – to adopt the habit of being socially responsible by paying their taxes, it is quite numbing that this monumental scandal can take place.
This is clearly one of the biggest scandals to come out of Nigeria this year and calls for immediate action to ensure that the offending organizations pay what they owe and that appropriate sanctions be applied if necessary.
Adding to the puzzle is the further revelation that corporations intersect with foreign and domestic oil and gas companies. It is therefore neither a local nor a foreign phenomenon; it is a general malaise that must be fought headlong.
The Nigerian Extractive Industries Transparency Initiative (NEITI) announcement indicated that the debts resulted from non-payment of taxes on petroleum profits by companies; corporate income tax and education tax. Others include VAT; Withholding ; royalties (oil and gas), gas flare penalties and concession rentals.
That such a huge number of companies could be indebted to the government for such a huge sum undetected for so long is beyond imagination and begs the question of what the relevant regulators were doing. There is obviously more than what the NEITI report showed. The taxes involved are clearly statutory obligations of companies engaged in the extractive industry around the world.
Items such as oil profits tax, royalties, and corporate income tax are standard items in oil and gas company financial reports. For exploration and production companies, for example, they are part of the cost elements used in calculating the eventual price of a barrel of crude oil. Thus, there can be no questions or ambiguity about the obligations or payment methods of companies.
Therefore, the first response to this embarrassing report is for the federal government to institute an investigation into who played what role in this saga. Where was the Federal Inland Revenue Service and other relevant authorities when businesses failed in their annual tax filing responsibilities? What happened to the FIRS delivery unit that caused 77 companies operating in such a visible industry to evade tax for so long? Could there have been cases of cover-up or collusion involving heads of agencies and companies?
FIRS is busy hunting down states for collecting VAT. Ordinary Nigerians and small businesses pay taxes on their meager income, but here are businesses operating in the country’s most important sector, willfully sidestepping their basic obligations to society.
On the part of companies, they must also answer the question of what has happened to the slogan ‘Publish What You Pay’, under which companies operating in the extractive industries are obliged to clearly and transparently publish the statements. amounts they have paid to the competent authorities in the form of taxes.
The figure of 6.48 billion dollars (about 2.3 billion naira; some say 2.6 billion naira) is not just a simple number. It is a resource with enormous opportunity costs, and its absence or presence makes a significant difference in the lives of millions of Nigerians. There are countless areas where it can be easily deployed for immediate impact.
It is more worrying that this unreasonable looting takes place at a time when Nigeria is relying on borrowing. Isn’t it ironic that these companies are in debt to the tune of more than $ 6 billion to a country that just borrowed $ 4 billion through the sale of Eurobonds a few days ago? A child born today will still pay some of that debt when he turns 30.
As NEITI Executive Secretary Dr Orji Ogbonnaya Orji pointed out, the debt of these companies could have covered the entire federal government investment budget in 2020, used for servicing the federal government debt. of $ 2.68 billion in 2020.
These facts make the non-payment of their taxes by the 77 companies an urgent matter that must be dealt with swiftly, with a view to determining in what other areas of the country’s tax system such a thing is happening. No nation that hopes to progress and meet the needs of its citizens can allow such a willful drain on its finances.
It’s time to stop it now!