The House of Representatives Committee on Public Account, on Friday, raised concerns about the loopholes in the waiver policy of the federal government.
The Chairman of the committee, Oluwole Oke (PDP, Osun), raised the concerns at the investigative hearing on the review of the audited reports submitted by the Auditor General of the Federation, Aghughu Adolphus.
The lawmaker said some companies have been taking advantage of the loopholes in the fiscal incentive of the federal government.
He accused the management of Indorama Eleme Petro-chemical, which appeared before the committee, of abusing the policy by accessing multiple incentives of the government.
The hearing was also attended by the Chairman of Federal Inland Revenue Service (FIRS), Muhamad Nami, and the Executive Secretary of the Nigeria Investment Promotion Council, Yewande Sadiku.
Mr Oke said the Auditor-General had queried the performance of the Nigeria Customs Service, Nigerian National Petroleum Corporation (NNPC), Mining Cadastre, FIRS and the Department of Petroleum Resources.
He questioned the process of granting waivers to entities and asked Mr Nami if there was a need for the National Assembly to address the problem with legislation.
“These duty exemptions, are they well formulated on the principles of law? These are the issues for the parliament as lawmakers to look into. Are there facts that the ministry, while granting this waiver, overlooked? Maybe by error of omission or commission, it is the duty of the parliament to oversight, to find out.
“So, FIRS and the parliament should work in synergy to ensure that we block all the loopholes in the tax arena. The taxpayers are deploying all sorts of schemes to undermine you. I say that on good authority as a tax lawyer, the line between tax evasion and tax avoidance is too thin – very thin– and you have to be observant.
“The taxpayers are undermining you, deploying all sorts of schemes including transfer pricing and non-disclosure. Even some agencies of government that ought to have worked in your best interest are also collaborating with them to undermine you.”
The committee also grilled Amil Leuma, the team lead of Indorama Group, over the controversial waivers.
The Indorama group, in 2006, acquired 65 per cent of the Eleme Petrochemical Limited from the NNPC. The company is now known as Indorama Eleme Petrochemicals Limited (IEPL).
Following the takeover, the company was given pioneer status. Companies with PSI can enjoy up to five years of tax holiday under the Nigerian Development Industry (Income Tax Relief) Act.
The company was given the PSI from 2006 to 2011 and was given another from 2012-2017.
Grilling by the committee….
Mr Leuma said his company did not break any law, but rather got the incentives following the rules. He noted that the company applied for pioneer status twice, because it changed its machines in 2011 and introduced new products to the market.
“Pioneer status is available to product-specific industry categories, it is not company-specific. The new status is the product we launched in December 2011.”
Mr Oke responded that, “I agree with you that the various laws you cited permit the issuance of pioneer status, issuance of certificate—I agree with you, I am not disputing that. What we are looking at is the misuse of the regulations.”
The committee frowned at the use of subsidiary companies to get incentives from the government.
The committee also resolved to set up a sub-committee to visit the plant of the company for further investigations and ordered the company to provide the lawmakers with more documents.
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