30% CIT On Foreign Tankers Will Affect Govt Revenue – Shipowners

The President of the Nigerian Chamber of Shipping, Mr Aminu Umar, expressed concern over the negative impact that the recently imposed 30 per cent company income tax on members of the International Association of Independent Tanker Owners would have on the revenue of the Federal Government.

The President of the Nigerian Chamber of Shipping, Aminu Umar, in a telephone chat with our correspondent on Sunday, said the tax regime may not affect refined petroleum products.

He said that it would, however, reduce the profit Nigeria would have made from crude oil sales.

“It does not affect the people who import refined petroleum products. It will only affect the people that export crude oil. It will not lead to any fuel scarcity. The only thing is that it will affect or reduce the money the Federal Government is going to spend on crude exportation. Because the person that is going to buy will rather reduce the money he or she will pay on the crude to recover for the shipping cost.

“So, it will reduce the money the Nigerians would have made from crude oil sales. It will reduce the profit the government would have made because the buyers will factor in the price. It will increase the cost of freight coming to Nigeria,” he averred.

 Also, a source close to Depot and Petroleum Marketers Association, told our correspondent on Sunday that the tax would affect the cost of fuel import.

 The source said that was part of the market fundamentals influencing the local pump price.

 “Marketers do their best to negotiate the best freight on vessels. However, this tax would be reflected in the cost of fuel imports, especially if it is dollar denominated. When we speak of market fundamentals influencing the local pump price, this is an example of such because the vessel owner will pass the cost (tax increase) to the charterer who, in turn, spreads the same on the fuel cost, thereby increasing the landing cost,” he explained.

Recall that the Federal Inland Revenue Service recently sent a demand letter to members of the International Association of Independent Tanker Owners regarding alleged freight liabilities relating to vessels that call at Nigerian Ports for wet cargoes since 2010.

The demand included a 10 per cent penalty fee and 19 per cent interest.

 In a communiqué issued at the end of a webinar organised by the Nigerian Chamber of Shipping last week, which was obtained by the PUNCH, INTERTANKO said it had contacted the FIRS and had requested more specific information on the calculation methodology for the freight tax and to inquire about similar demands issued to charterers.

The communiqué, which was signed by members of INTERTANKO, shipowners and the Nigerian Maritime Administration and Safety Agency, explained that the detailed breakdown of calculations specifying the exact cargo/freight amounts per voyage had not been provided by FIRS.

INTERTANKO also warned its members that non-payment of the tax assessments was considered tax evasion and a criminal offence by FIRS.

“INTERTANKO has informed its members that non-payment of the tax assessments is considered tax evasion and a criminal offence by FIRS. The association has contacted FIRS to request further specific information on the calculation methodology for the freight tax and to inquire about similar demands issued to charterers,” it stated.