The Federal Inland Revenue Service (FIRS) has said most mainstream shipping companies that refuse to comply with their tax obligations get away with their actions due to poor enforcement of relevant laws by the Nigerian Maritime Administration and Safety Agency (NIMASA), Nigerian Ports Authority (NPA) and other government agencies operating in the maritime sector.

The Technical Assistant to the Executive Chairman, FIRS, Olarinde Olufemi, stated this during a courtesy visit of the FIRS team to The Guardian head office in Lagos.

FIRS had issued a warning to international shipping line operators in the country to either regularise their tax affairs with the tax body by December 31, 2023 or face sanctions.

The tax body, in a public notice posted on its Twitter handle on Monday, said it observed that many international shipping lines have refused to comply with the tax obligation imposed since December 2021.

The public notice signed by the Executive Chairman, FIRS, Muhammad Nami, said it is in furtherance to the FIRS circular no: 2021/14 dated June 3, 2021 on the taxation of international shipping and airlines and public notice December 17, 2021 on the tax compliance of international shipping lines.

FIRS asked all affected international shipping companies operating in Nigerian territorial waters in whatever capacity (Containerised, bulk cargo, fishing trawlers, crude oil or natural gas lifting vessels, dredgers, survey, Floating production storage and offloading (FPSO) operators amongst others to immediately regularise their tax positions not later than December 31, 2023.

The tax body said it is collaborating with relevant government regulatory and security agencies in the maritime sector to commence enforcement action on all defaulting shipping companies after the expiration of the grace period.

Explaining further, Olufemi said the government agencies in the maritime sector were supposed to demand a tax clearance certificate before anyone can do business in that sector.

He said section 13(2) of the country’s tax law prescribes that every company other than a Nigerian company will pay tax if they fulfill certain conditions.

According to him, the conditions include if the companies earn income from contracts in Nigeria, have a fixed base and significant economic presence in the country.

He said section 14 specifically speaks to companies in the international transport business, which are subjected to taxation if they earn incomes on the carriage of goods and passengers from the country.

“What we have seen over the years is that the airlines pay because we can easily see them. The mainstream shipping companies pay, but the ones we have issues with are the tankers, those that lift crude. FIRS cannot be on the high sea to enforce.

“The problem we have is the issue of enforcement because probably some other government agencies, whether they didn’t understand that fact or something. FIRS in 2021 released a circular just to intimate that sector that these are the obligations they were supposed to fulfill and we did that trying to enforce,” he said.

Olufemi disclosed that enforcement has been included in the Finance Act of 2023 and has been made an offence by the regulatory agencies.

“The maritime agencies must demand a tax clearance certificate before anyone can do business in that sector. Either you come new or continue the business, the agencies must demand a tax clearance certificate.

“Any international shipping companies that want to do business here must approach FIRS to get a tax clearance certificate before NIMASA, NPA or what have you, give them clearance to operate,” he said.