About 25 oil firms are being investigated in connection with the illegal $4.5b tax waivers granted by the Nigerian Investment Promotion Commission (NIPC), The Nation learnt yesterday.
Besides, the Economic and Financial Crimes Commission (EFCC) agency has uncovered N600million fraud on phantom training of 170 workers in the commission.
About N3million was remitted to each of the 170 officials but the beneficiaries were later directed to pay N2million into the account of a bureau de change operator.
Ten top officials of the NIPC and an external auditor have been quizzed by the EFCC.
The NIPC officials are said to have sworn to stop the investigation at “whatever cost”.
According to sources, EFCC investigators have discovered that 25 oil companies benefited from the $4.5billion tax holiday.
It was gathered that the tax relief was given to the 25 firms under the guise of pioneer status
A highly-placed source said: “The probe of the $4.5billion tax waivers by the NIPC has reached an appreciable level. In all, 25 oil firms were involved.
We have interrogated 10 members of the staff of NIPC and invited an external auditor of the commission.
“The tax holiday showed that the NIPC denied the nation the huge sum between 2010 and June 2014 when it was stopped.
“One of the key things in the ongoing investigation is that the law was certainly misapplied for some selfish reasons to aid a few oil firms to evade tax.”
Responding to a question, the source added: “The 25 oil firms ought not to have benefited from the Industrial Development ( Income Tax Relief) Act. They fall under the Petroleum Profits Tax Act (PPTA).
Preliminary findings by EFCC investigators revealed the following:
*Under the existing Industrial Development (Income Tax Relief) Act (IDA) and Company Income Tax Act(CITA), companies engaged in petroleum exploration and production were not eligible for grant of pioneer status
*The Federal Inland Revenue Service(FIRS) was not aware of any Federal Executive Council approvals on the pioneer status schedule
*The grant of pioneer status by NIPC to the 25 oil firms was a breach of the law in relation to taxation and incentive matters.
RMAFC recommended that companies involved in the Upstream Petroleum activities should not benefit under CITA/IDA nor should they come under the purview if NIPC for pioneer status administration.
A document obtained by our correspondent said: “That companies in Nigeria are generally taxed under the CITA while those engaged in petroleum operations are taxed specifically under the PPTA.
“The PPTA is meant to regulate the financial activities of oil companies engaged in crude oil production, petroleum marketing and the servicing companies that engage in such activities as seismic survey, drilling and data collection.
“It is the profits generated by companies engaged directly or indirectly in petroleum operations that are subject to tax under the PPTA, while profits generated by marketing and servicing companies are taxed under the CITA.
“The committee was asked to note the definition of ‘petroleum operations’ under Section 2 of PPTA, which defines upstream and downstream operations. It applies to companies that win and obtain and engage in petroleum operations on their own account.
“That the President’s power under Section 23(2) of CITA to exempt by order, any company from the provisions of CITA or from the payment of tax, must be construed as limiting the exemption to companies that are within the contemplation of the provision of CITA And cannot be interpreted to include companies outside the contemplation of the CITA. Any income taxed under the CITA is exempted under the PPTA.”
But some of the oil companies were said to have claimed that “they were lured into the tax waiver/ holiday because they did not know that they were qualified for such under the NIPC Act”.
A source added: “NIPC lured the oil companies to seek pioneer status, believing that they qualified, by using tax consultants.”
On May 10, the former Co-ordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala raised the alarm that the Federal Government had lost over $20b to tax holidays fraudulently granted companies by officials of the Nigerian Investment Promotion Commission (NIPC),
She said: “Pioneer status (tax holidays) was granted to companies whose products do not meet the requirements of the list of industries or products specified in the schedule to the Act.
“NIPC officials granted tax holidays for a straight five-year period, contrary to the provision of Section 10 of the Act, which states that the tax relief period for a pioneer company shall commence from the production date of the company and shall continue for a period of three years in the first instance, and may be extended for a period of one year and thereafter for another one year, or for a period of two years subject to the satisfaction of Mr. President that certain requirements, such as rate of expansion, standard of efficiency, level of development of company, among others, are met.”
As EFCC investigators are probing the $4.5billion tax holiday, they have uncovered a N600million fraud.The cash was taken for a training.
A document obtained by our correspondent said in part: “The purported training was to cost N600million. About N3million was remitted into the account of each of the affected 170 staff. But each staff was directed to pay N2million to a bureau de change operator in Zone 4 in Abuja.
“Those involved were from the Administration, Finance and Accounts, Procurement and Audit departments in NIPC.
“One of the officials under investigation used to be a conduit for taking money out of the commission for the cartel operating in NIPC. He has collected cash advance of more than N80million outside the N600million. He owns an auto sales shop in Abuja.”
