Tax holiday: Shell, Total, ENI robbed Nigeria of $3.3bn – ActionAid

*Shell facility.

*Shell facility.

…Says govt has no business borrowing from China

Oscarline Onwuemenyi

16 April 2016, Sweetcrude, Abuja – ActionAid Nigeria has stated that the country lost over $3.3 billion due to an extraordinary 10-year tax break granted some of the world’s biggest oil and gas companies by the Federal Government.

The Policy Advocacy and Campaigns Manager of ActionAid Nigeria, Mr. Tunde Aremu, who disclosed this in Abuja, also argued that Nigeria has no business borrowing $6 billion from China because it has continued to lose significant volumes of financial resources, which could have been used to finance critical development projects from illicit outflows from tax waivers.

Aremu noted that the consortium of the major oil and gas companies known as Nigeria Liquefied Natural Gas (NLNG) started exploiting the country’s resources under the tax holiday in 1999 with its impacts are still being felt.

He hinted that the huge tax break was in triple phases where the consortium paid no corporate income tax for its five years of operation between 1999 and 2004.

According to him, “The breaks enjoyed by the consortium during these five years are not included in its calculation of $3.3 billion lost to tax breaks. The period between 2005 and 2009 marked the beginning of the unusual corporate tax exemption granted to the consortium.”

He stated that the amount was the equivalent of twice the nation’s healthcare budget and thrice the educational sector’s budget for 2015 in a country where 11 million children and young people do not go to school and where almost 15 of 100 children die before their fifth birthday.

The Campaign Manager, however, emphasised that there were several questions regarding the consortium’s taxes that are still unanswered, as the beneficiary and the Federal Inland Revenue Service (FIRS) have different views on tax holiday granted through the NLNG Act.

Citing the then Director of Oil and Gas, FIRS, Bamidele Ajayi, Aremu noted that, “Upon the expiration of the tax holiday in 2009, it has been difficult to get them to clear up tax liabilities because of the complex clauses in the tax holiday document, which made it an open-ended document.”

Meanwhile, the Project Director of Trust Africa, Donald Ideh, said although taxation was the most important source of revenue that enables governments to finance development and provide services required by citizens, illicit outflows (IOFs) have continued to yield devastating effects on Nigeria’s economy by hampering governments’ developmental efforts.

He advised that government should appraise and evaluate current regime of incentives and in addition put in place monitoring and evaluation mechanism for tax incentives and how they are granted.

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