Crude swap deals: House demands oil traders pay millions in outstanding tax

*House of Representatives.

*House of Representatives.

Oscarline Onwuemenyi

28 January 2016, Sweetcrude, Abuja — The House of Representatives yesterday directed the Federal Inland Revenue Service, FIRS, to compute the volume of crude oil trading by marketers operating in Nigeria for appropriate tax assessment.

The directive followed a revelation by the FIRS that one of the major traders, Trafigura, had never paid tax on its operations to the government.

The FIRS made the submission to the ad hoc committee of the House investigating the refined product exchange agreement contracts between the Nigerian National Petroleum Corporation and the crude trading firms.

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.

According to the Pipelines and Product Marketing Company, PPMC, Trafigura lifted 12.5 million metric tonnes of crude oil out of Nigeria between 2011 and 2014.

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.

The committee directed the firms to make a commitment on when they would pay up.

The firms did not dispute the tax figures and pledged to pay the money without further delay.

The committee later adjourned sitting till Tuesday next week to take the presentations of the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, and the management of the NNPC.

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