Alleged tax evasion: House of Reps Committee exposes over 30 oil coys

The report of the House of Representatives ad hoc Committee investigating the structure and accountability of joint venture (JV) businesses and production sharing contracts (PSC) of NNPC has indicted several oil companies for alleged tax evasion.

The report also said the Chairman of the Federal Inland Revenue Service (FIRS), Mr. Mamman Nami, should be arrested and prosecuted for aiding tax evasion by oil companies.

In the report obtained by the News Agency of Nigeria (NAN), the investigation by the House of Representatives committee began in 1991 and has continued to this date, with tax evasion running into trillions of naira.

The report is expected to be laid before lawmakers this week.

The ad hoc committee investigation, chaired by Rep. Abubakar Fulata, revealed that the JVs and PSCs of NNPC sold Nigerian oil at the lowest cost to their own subsidiaries in a ”tax haven”.

The committee alleged that the company subsequently sold the same oil to other buyers at full price while inflating the cost of their Nigerian production operations and underreporting the volume of oil they produced.

Apart from outright circumvention of the Nigerian tax laws, this, the committee said, is an abusive and contrived tax avoidance scheme to minimize their tax liability.

The ad hoc committee is praying for the house to adopt the recommendations with a view to bringing sanity to the oil and gas operations in Nigeria.

This, according to the report of the committee, would have greater benefits for the citizens.

The committee report also showed that all international and national oil companies that enjoyed capital allowance in Nigeria had no Certificate of Acceptance of Fixed Assets (CAFA) as prescribed by the Industrial Inspectorate Act.

The report, however, said that all oil companies that benefited from capital allowance without obtaining CAFA as prescribed by the Industrial Inspectorate Act should be made to refund all the monies to the government treasury.

NAN reports that on Nov. 1, 2022, the house ad hoc committee investigating the structure and accountability of the joint venture (JV) businesses and production sharing contracts (PSCS) of the Nigerian National Petroleum Limited began probing oil companies accused of tax evasion.

The probe was conducted against the backdrop of alleged tax evasion by some oil companies operating in Nigeria, which led to the constitution of the committee by Speaker Femi Gbajabiamila.

Fulata, at a meeting with stakeholders in the oil and gas industry, cited relevant sections of the 1999 Constitution as amended.

He said: “This committee is relying on Sections 88 and 89 of the 1999 Constitution of the Federal Republic of Nigeria as amended, and we are asking heads of agencies who failed to forward their submissions to do so.

“This committee cannot fail in its mandate, and we might resort to the use of police and other security agencies to compel heads of agencies to do so.”

Fulata decried that tax evasion by oil companies, particularly the International Oil Companies (IOCs), has negatively affected the country's revenue.

Fulata has expressed disappointment that several letters of invitation sent out to some organizations were not responded to, revealing that those who responded did so shabbily.

NAN reports that on Nov. 16, 2022, the house committee summoned the chairman of the FIRS.

A representative of FIRS, a director, and a special assistant were not permitted by members of the committee to make a presentation as they insisted that only the chairman is expected to speak on behalf of FIRS.

The FIRS representatives had earlier told the committee that the service does not have access to the stock certificate of crude oil being lifted.

The representatives said they only relied on the invoice produced and presented to them by the oil companies, which the committee referred to as ridiculous.