OrderPaperToday– The House of Representatives has disclosed that it will probe over $30billion annual revenue leakages arising from tax evasion, sharp practices, misuse and diversion of foreign exchange allocations by companies and other entities.
To this effect, it has passed a motion seeking to investigate various originating documents maintained by Central Bank of Nigeria (CBN), banks, forex dealers, Federal Inland Revenue Services (FIRS), importers and other beneficiary companies.
Furthermore, it will identify and expose all perpetrators and the defaulters based on verifiable documents obtained from valuable records and determine the actual revenue amount involved in the malpractices by each organisation based on every revenue line item collectible by all agencies of government for the purpose of timely recovery into government accounts.
Findings and recommendations from the probe, it added, will be put into a formal document for correction and regularisation of the problems and ultimately, to put a stop to the menace in the future.
The resolutions were sequel to a motion of urgent national importance brought by Mr. James Faleke (APC) on Thursday during plenary.
Faleke decried the current low performance of the country’s economy, noting that in the past years, Nigeria has not been able to fund capital aspect of its annual budget due to lack of funds alluded to low remittances by revenue generating agencies, low payment of taxes by private companies and diversion of expected revenue by corporate organisations.
He expressed worry that crude oil price bench mark in the international market has dropped to 47 dollars per barrel from the $57 pegged in the 2020 Appropriation Act, a clear indication that the major source of revenue towards funding the 2020 Appropriation Act is already in the
In his debate, he stressed that “there is the urgent need to rescue the country from over $30 billion dollars annual revenue leakages arising from tax evasion, malpractices, misuse and diversion of foreign exchange allocations by companies and other entities.
Meanwhile, the House said it would focus primarily “on the pro-forma invoices overstatement by importers with the intention of obtaining large forex allocation above the international cost, insurance and freight value of goods, thereby increasing the domestic inflation rate.”
It would also beam it searchlight on fictitious transfer of forex allocation for the payments of dividends to foreign shareholders of Nigeria companies above the dividend approved by the company’s board of directors and audited accounts, thereby leading to evasion of statutory 30% company income tax.
Another area of focus will be the allocation of foreign exchange to companies for the repayment of principal foreign loan and interest that were in some cases found to be non-existing, but rather a fictitious loan backed by a mere packaged documents without evidence of utilisation in Nigeria and related taxes paid.
Furthermore, “The companies in some cases were allocated foreign exchange for the purpose of investment of same in other countries stocks i.e. United State treasury stock, that neither contribute to federally collectible revenue nor reflate the Nigeria economy……..Abuse of millions of dollars in forex allocation to companies for the purpose of payment of foreign vendors for services rendered in Nigeria were in most cases found to have evaded the then statutory 5% VAT and 5% WHT accordingly”.
The Lagos member also expressed concerns over the value of imported physical goods, materials, equipment on account of forex allocation by most companies were always understated to Nigeria Customs Service at the port of arrival in order to reduce import duty payable and based on verifiable information, importers at the post clearance stage do inflate the value of these items in their books in order to obtain frivolous capital allowance or expense claims from FIRS which ultimately deny the government of much needed revenue from Company Income Tax and Education Tax.
He further explained that companies in offshore engineering, procurement, construction, installation and transportation whose forex funding source were from cash calls and, operators sourced foreign loan should pay their foreign vendors billions of dollars in contract payments on annual basis without any significant payment of all applicable taxes, levies and likewise, these companies were not being incorporated in Nigeria nor have affiliate in Nigeria as statutorily provided for in the Companies and Allied Matters Act.
Most members who contributed to the motion threw their weight behind it.
According to Mr. Toby Okechukwu (PDP, Enugu), the deputy minority leader, “some persons must be responsible for these leakages. I want to believe Mr. President would do justice to this. They should be a tally with your pro-forma invoice if not then somebody ought to be sacked or put in jail.”
Meanwhile, Mr. Henry Nwawuba thanked his colleague for bringing this motion. “We have close the window of our foreign policy whereby different exchange rate for different category of people. I would like the Committee responsible for the public hearing to look into this as well.”
Also making his submission, Mr. Tahir Mohammed Monguno said, ” this motion is in tandem with section 88 of the constitution of the federal republic of Nigeria, which gives the national assembly the powers to investigate and expose corruption”.
The motion was unanimously adopted when Speaker Femi Gbajabiamila put the question and referred to the Committees on Banking and Currency and Finance for further legislative input.