Companies that benefited from fuel subsidy trillions paid no tax

The hundreds of fuel importing companies that for years earned trillions of naira in fuel subsidies, paid no taxes on the product, the federal tax office said on Wednesday as more details of the subsidy management continues to emerge.

The Head of the Federal Inland Revenue Service (FIRS), Ifueko Omogui Okauru, said a federal government waiver, which lawmakers have queried and are asking for further proof, exempted the companies from paying tax on petrol, diesel and kerosene, even when they reaped trillions from subsidy payouts.


She spoke at the ongoing House of Representatives hearing on how years of subsidy were managed.


Mrs. Omogui said that it was a government policy not to charge Value Added Tax (VAT) on the products to save Nigerians from paying heavily for the products.


“Government has been very sensitive on the issue of tax on petroleum products which is a major source of revenue,” she said.


A revised version of the VAT which may block that privilege is underway, and will be presented to the National Assembly shortly, the agency’s boss added.


But the details, shocking even to the lawmakers, have only added to the series of mind-boggling revelations that have emerged in the course of the two-week old public hearings.


The legislators believe this failure may have cost the nation hundreds of billions in revenues since 2006, and that it reflects how vital sources of government funding are either casually managed or willfully neglected.  


The House committee leading the investigation, headed by Farouk Lawan, ordered the FIRS to provide a paper of authorization and names of all the companies that benefited from the waiver, as well as details of income and other taxes paid by the companies.


As the hearings progress, more companies with questionable conducts are being put in the spotlight, with several records of subsidy overpay, irreconcilable data of product supply records, and outright falsification of records.


On Wednesday, Total Oil Nigeria made an alarming presentation of what generally appears typify the subsidy management.


The company’s Managing Director, Francois Bussagol, said the company was paid N11 billion in 2010 for the importation of 251 million liters of petrol.


Astonishingly, in 2011, the same company was paid N16 billion for importing 211 million of liters – a far lower quantity of fuel yet for a higher pay.


The details sparked outrage at the hearing.

Mr. Bussagol denied the company ever received overpayment for imported products, but when pressed further, adjusted his position to claim that any overpayment had been paid back to the Department of Petroleum Resources.


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