In what appears to have taken international shipping companies by surprise, the Federal Inland Revenue Service (“FIRS”) recently issued tax assessment notices to international petroleum tankers and transport vessels operators, regarding the recovery of income tax allegedly owed over the period from 2010 to 2019 (the “Tax Assessments”). These Tax Assessments indicate a computation of 6% tax, 10% penalty, and 19% interest rate in respect of profits derived from Nigeria during the relevant period, remittance of which is due and outstanding.
The resultant effect has led to the withdrawal of a large pool of foreign oil vessels from operations in Nigeria by their owners in a bid to prevent an arrest or detention of the vessels by the FIRS. This development has directly resulted in higher freight costs due to the fall in supply of service. As a stop-gap measure, the Federal Government of Nigeria, through the Special Adviser to the President on Revenue, at a recent shipping stakeholders’ meeting, guaranteed that no vessel will be detained or arrested due to the Tax Assessments. Further, the Special Adviser noted that a technical committee comprising of the oil and gas industry regulators[1], FIRS, and relevant offices of the Presidency, will be set up to consider concerns arising from the Tax Assessments.
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