The face-off between Air Nigeria and the Federal Inland Revenue Service (FIRS) over a disputed N5billion tax liabilities claims took a new dimension on Tuesday with both organisations trading grave allegations.
While the FIRS accused Air Nigeria of presenting a counterfeit Companies Income Tax Clearance Certificate last January to secure expatriate quotas for its workers, the airline hit back by accusing the tax agency of blackmail, negligence and invasion of its office with armed policemen to demand the payment of tax liabilities owed by its predecessor, Virgin Atlantic.
“In January this year, Air Nigeria presented a counterfeit Companies Income Tax Clearance Certificate purportedly issued by the FIRS, in favour of Air Nigeria Development Company Ltd,” FIRS Director, Communications and Media, Emmanuel Obeta said.
“This TCC was presented to the Interior Minister to, inter-alia renew quota positions for twenty (20) Pilots and ten (10) others. Documents in possession of the FIRS show that Air Nigeria submitted a counterfeit seal of the FIRS on a Companies Income Tax Clearance Certificate purportedly issued by the FIRS.”
A team from the Debt Enforcement and Special Prosecution Unit (DESPU) of the tax agency had on Monday, during its tax enforcement drive, visited the airline’s office in Lagos to recover arrears of tax revenues due to government from Withholding Tax (WHT) and Value Added Tax (VAT).
At the end of the visit, the team arrested the airline’s Managing Director, Kinfe Kayssay, after his explanation on why the company failed to remit about N4.9billion revenues from Withholding Tax (WHT) and Value Added Tax (VAT) as well as refusal to file its annual tax returns since 2011 contrary to Section 31 of the VAT Act No. 12 of 2007.
But reacting to the arrest of its chief executive officer, the airline’s Media Relations Manager, Samuel Ogbogoro, on Tuesday accused the tax agency of impatience and a resort to military approach by deploying armed policemen to invade its office.
“These taxes have been in dispute and needed to be reconciled and agreed upon,” Mr. Ogbogoro said. “The FIRS is however not patient with such reconciliations, but resorted to a military approach in a civilian era. Air Nigeria is not indebted to the government on current taxes since the acquisition of the airline by Dr. Jimoh Ibrahim, OFR. We therefore consider the FIRS action as uncivilized and condemnable.”
He accused the FIRS of negligence, saying the company is at a loss as to what the agency has been doing for the past eight years without collecting the taxes from previous management of the airline, warning that Air Nigeria would not be intimidated, as it “will not be ready to give bribe to any person no matter how highly placed.”
Blaming the airline’s travails on some unnamed external forces, Mr. Ogboghoro alleged that since Air Nigeria commenced international operations on the Lagos – London route recently, the airline had become the object of orchestrated attacks reminiscent of “a case of the voice of Jacob and the hand of Esau.”
However, in a counter statement, the FIRS denied accusations of misconduct and blackmail against its officials, saying as a responsible organisation committed to the highest moral integrity and ethical conduct expected of a tax authority, the agency would not allow its officials do anything that would violate their codes of ethical conduct in the performance of their duties.
“The claims are concocted by Air Nigeria in an attempt to obfuscate issues and whip up public sentiment against a lawful agency of government, doing its utmost to ensure that all business that operate within Nigeria, fulfil their minimal corporate obligation to the Nigerian state,” Mr Obeta said.
While agreeing that some of the debts date back to the days of Virgin Nigeria, the FIRS spokesman pointed out that a substantial part of it are as recent as two to four years ago when Air Nigeria had taken over the company, adding that discussions have been ongoing with both, with several unfulfilled promises to pay up.
The visit to Air Nigeria’s office in Lagos, the agency said, was the last resort after several unfulfilled commitments by its officials, pointing out that throughout the discussions and meetings, the age of the debts was never an issue.
“When one takes over a business, one inherits all the acquired business’ assets and liabilities. Thus, Air Nigeria is deemed to have inherited all assets and liabilities when it acquired Virgin Nigeria. To try to distance itself from the liabilities of Virgin Nigeria is not in sync with known business practice, law and international precepts,” the statement said.
On the debt figures, the FIRS said that between January and December 2008, Air Nigeria failed to deduct VAT of about N634million, while about N1.3billion was outstanding between January and December 2009, and N1.5billion in 2010.
Besides, it said Air Nigeria failed to file Annual returns for 2011 and 2012 as prescribed by law, with outstanding Withholding Tax between January and December 2006 totalling about N394million, or about 10 per cent of payments for direct services to the company. Outstanding Withholding Tax against Air Nigeria was about N775million between January and December 2007.