A report by the Socio-Economic Rights and Accountability Project (SERAP), released in Lagos yesterday, has revealed how failure of multinational companies to pay Capital Gains Tax (CGT) on over $8 billion oil and gas assets sold to Nigerian entities fuels poverty, underdevelopment and inequality in Nigeria.
The report entitled “Impact of Non-Payment of Capital Gains Tax (CGT) and other Levies in the Oil and Gas Sector on the Socio-Economic Development of the Country” x-rayed how past administrations failed to collect CGT on sold oil assets.
SERAP explained that information obtained from the Federal Inland Revenue Service (FIRS), indicated that the governments of Umaru Musa Yar’Adua and Goodluck Jonathan, failed to collect CGT on the sale of Addax Petroleum to Sinopec in 2009 from divestment of assets worth $2.5 billion.
It stated further that the Jonathan administration also failed to collect tax on the transfer of ConocoPhillip Oil Company Nigeria Limited to Oando Hydrocarbon (Now Oando Oil Limited) through the acquisition of the shares of ConocoPhillips of Canada for $1.79 billion. The shares were acquired by Oando Energy Resources Canada.
The report, however, called on the authorities to urgently recover any possible past-unpaid dues, and improve on the collection and estimation of capital gains tax in the Nigerian oil sector.
“In recent years, economic inequality has soared to unprecedented levels in Nigeria, hampering poverty reduction efforts, fuelling political instability and presenting new threats to the full spectrum of human rights.
“The political will to improve framework and policies for the determination and payment of capital gains tax in the oil sector could generate the much needed revenue for execution of government projects and provision of infrastructure and socio-economic development. As such, an improved framework has the potential to galvanise action to reduce poverty, underdevelopment, unemployment, and inequality,” the report stated.
The report presented to the media by Mr. Azeez Alatoye and Mrs.Bimpe Balogun urged “the Federal Government to move swiftly to improve the administration of capital gains tax in the oil and gas sector and to identify the loss over a period of time.”
Commenting on the report, Human Rights activist, Mr Femi Falana (SAN), said “SERAP deserves commendation for the public presentation of this timely report. From the report, not less than $270 million has not been recovered by the Federal Government, the amount recoverable has not been captured due to the refusal of DPR and NEITI to provide information sought on the oil companies that have divested interests in the oil and gas sector. SERAP should proceed to compel the two agencies to supply the information so as to update the report.
“Just yesterday, the NEITI disclosed that the NNPC and others have withheld the sum of $22.06 billion and N481 billion from the federation account. SERAP should collaborate with NEITI to collect the huge fund without any further delay.
“SERAP and the progressive extraction of the civil society must take special interest in the judgment of the Supreme Court which has ordered the federal government to recover 18-year lost revenue from oil giants under the Deep Offshore Inland Production Contract Act,” he said.