DAPPMAN express worry over the FG's new tax structure

The Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) expressed concern on Tuesday over the new 0.5 percent tax on the gross turnover of petroleum marketing firms proposed by the federal government.

Mr. Olufemi Adewole, the Executive Secretary of DAPPMAN, said at the maiden edition of the Platforms Africa Continental Forum in Lagos that the tax would put many firms out of business.

Adewole said there were indications that a fuel distribution crisis may soon hit the country if the government implements the new tax regime.

He was emphatic that more than half of the fuel marketing firms in Nigeria would close down if the tax burden was slammed on them.

According to him, the imminent closure of businesses poses a threat to the smooth distribution of petroleum products across the country.

"The petroleum marketing firms' trading margin is so small that they cannot pay such an amount sustainably."

"Petroleum marketers operate at a very low margin, but the turnover is huge." "Unfortunately, the margin does not correspond with the turnover," said Adewole.

He added that the margins they made when fuel sold for N40 per liter were the same when the price rose to N160 per liter and N200 per liter, respectively.

According to him, "The Finance Act 2020" says the marketers have to pay 0.5 percent of their gross turnover by the end of this year.

"It is unimaginable that probably half of the petroleum marketing firms existing now may go under if the new tax regime is implemented."

"Except the regulator, which is the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), approves a new margin for the marketers."

He said the association had called on the government to give petroleum marketers access to foreign exchange at the official Central Bank of Nigeria (CBN) rate to enhance the supply and distribution of Premium Motor Spirit (PMS) across the nation this holiday season.

According to DAPPMAN, shortage of foreign exchange (forex) coupled with several unauthorised levies, bad roads are among the factors making fuel importation and distribution burdensome for members.

The News Agency of Nigeria reports that the fuel marketers recently bemoaned the acute scarcity of forex in the official market, which is currently threatening the importation and distribution of petroleum products and impacting deeply on their prices across the country.