FIRS Issues Shipping Companies December 31st Deadline to Reconcile Tax Books

As part of efforts to ensure strict compliance with the country’s tax laws, the Executive Chairman of the Federal Inland Revenue Service, Zacch A. Adedeji has charged international shipping companies operating in Nigeria to ensure to reconcile their books with the Service before December 31, 2023.

The FIRS Chairman gave this charge in Lagos at a workshop on taxation of non-resident shipping companies organised by FIRS in conjunction with the Oil Producers Trade Section (OPTS) on Monday, according to a statement by Dare Adekanmbi, his special adviser on media.

Adedeji revealed that the tax compliance exercise initiated by FIRS on the activities of foreign shipping companies lifting hydrocarbons from Nigeria was not intended to disrupt their operations, but rather a measure to widen to tax net to grow revenue for the government.

Adedeji noted that his directive was backed by Section 14 of the Companies Income Tax Act (CITA) 2004 (as amended), which mandated foreign companies engaging in shipping and air transport operations in Nigeria to file tax returns to continue to carry out their businesses within the country.

The FIRS boss explained that his intervention upon assumption of duty had earlier led to the six-month grace period given to international shipping companies to regularise their tax returns, emphasising that they have up to December 31 this year to reconcile their books with FIRS.

The Federal Government has set a target of increasing Nigeria’s tax-to-GDP ratio to 18% within the next three years.

“The goal is to achieve this without imposing additional taxes but by broadening the tax net. The compliance exercise on international shipping companies lifting crude oil from Nigeria is in line with this strategy of broadening the taxnetwork.

“I am sure all the international shipping companies that we contacted are aware of the importance of complying with tax laws in the various jurisdictions they operate.

“Therefore, I urge the international shipping companies that are not complying with Nigerian tax laws to begin to do so immediately.

“The Service has noted the concerns raised by stakeholders in the oil and gas industry and the maritime sector regarding the tax compliance exercise initiated on international shipping companies lifting crude oil from Nigeria.

“I wish to state that the Service is aware of the economic importance of the sector and has no intention of disrupting operations, rather the objective is to instil compliance with Nigerian tax laws.

“Please recall that as Special Adviser on Revenue, I facilitated an intervention on this matter in June this year.

“This resulted in the six-month grace period granted to non-resident shipping companies to regularise their tax affairs and contribute their fair share to the revenue of the country. The grace period will expire at the end of this year.

“Furthermore, upon assuming the role of Executive Chairman of FIRS, I emphasized the importance of collaborating with stakeholders to address challenges associated with tax compliance.

“It is in this spirit that this workshop has been organised with various stakeholders in the oil and gas industry and the maritime sector.

“I assure everyone here that FIRS, as an institution, is open to a transparent and fair resolution of assessment notices served on any taxpayer.

“Nevertheless, if required the Service is prepared, to enforce Nigerian tax laws without violating the rights of any taxpayer,” Adedeji said.

The workshop was attended by members of the International Association of Independent Tanker Owners (INTERTANKO), the International Chamber of Shipping, the Independent Petroleum Producers Group, government agencies and tax advisers among others.