Tanker owners operating in or near Nigeria have not been having a happy time of things recently, and another potential problem has arisen via newly-assessed back taxes, reported Intertanko.
Bloomberg cited at least two tanker owners as having received requests for payment for millions of dollars as a result of tax liabilities – dating back more than 10 years – of which they had previously been unaware.
Intertanko has issued a circular to members that reportedly describes some tax assessments reaching $10m – comprising assessed liabilities in some cases of more than $1m a vessel.
Although the assessed liabilities date back many years, they are based on a notice published only in 2021, which referred back to the Companies Income Tax Act of 2007. The 2021 notice imposed tax liability on merchant tankers calling in Nigeria.
The letters being sent by Nigerian Federal Inland Revenue Services (FIRS) allege that certain named vessels had traded to Nigeria between 2010-2019 but had neither filed Companies Income Tax (CIT) returns nor paid taxes to the Nigerian government. The claims vary depending on the value of the cargo and number of visits by the vessel, but are in the range of $400,000 to $1.1m per vessel.
INTERTANKO said that it was writing to the FIRS to ask for more clarity on this issue. It asked Members to let the Association know if they had received similar demands from the FIRS or have any more information on this issue, so that INTERTANKO could consider a standardized industry approach.
The two tanker owners cited in the report asked to remain anonymous. They said that temporarily they were avoiding Nigerian ports because there was a serious risk of their vessels being seized.
That leaves Nigerian producers with fewer options for wet bulk freight, raising the cost of shipping for oil, which is Nigeria’s most important foreign exchange-earning sector.
Tanker rates on Nigerian routes rose by more than 25% earlier this week as other owners took advantage of the tighter market, according to the report.
Group Club NorthStandard advised members to be alert to the possibility of receiving letters from the FIRS, which considers non-payment of the demands to be classified as tax evasion and a criminal offence. The common understanding following consultation with club legal advisers in Nigeria was that there was a 30-day period in which to appeal the demand after which there is a risk of vessels being detained.
Nigeria’s attitude to the global tanker industry is both puzzling and yet depressingly predictable – based on political and financial factors that could end up having the opposite effect of that intended.
Last August, the BP-chartered VLCC Heroic Idun was chased by a Nigerian Navy vessel which the captain and crew of the tanker reported as a suspected pirate attack. It fled to Equatorial Guinea’s waters, but was then subject to rendition back to Nigeria, where it was held for several months, along with its crew, until $15m was paid to Nigerian authorities.
The crew were only released from captivity in the past few weeks, having been in detention for 10 months.