The joint House of Representatives Committee on Finance, Banking and Currency on Monday said that Nigeria lost about $30 billion from 2005 to 2019 annually from revenue leakages.
The leakages were basically from activities of agencies and companies in banking, oil exploration, engineering, procurement, construction, installation, marine transportation, manufacturing and telecommunications upon which the committee noted significant foreign exchange and revenue shortfall infractions against the country.
The Chairman of House Committee on Finance and co-chairman of the joint committee, Hon. James Faleke, at the commencement of the investigative hearing said the House at its sitting on March 5, 2020, resolved to conduct an investigative hearing on revenue leakages in excess of $30 billion.
He said, “The necessity and commencement of this investigation was as a result of growing problems in the financial management of all the God-given resources in our country, Nigeria, from our vast natural resources to the value added by these resources in the form of foreign exchange earnings and revenue generation etc. into these investment environment and opportunities.
“Thus, this committee deemed it imperative to investigate revenue leakages and loopholes in the system that have contributed to a loss of over $30 billion in annual federation tax revenue between 2005 and 2019.
“The investigation, therefore, was premised on the documents received from target agencies and companies in banking, oil exploration, engineering, procurement, construction, installation, marine transportations, manufacturing and telecommunications upon which the committee noted significant foreign exchange and revenue shortfall infractions against the Federal Republic of Nigeria by these stakeholders.
“This places an imperative need to put an end to, or at best, minimise all attributable infractions that have been instruments in the hands of some stakeholders in bringing economic woes to this country and her people.
“During our documentation compilation and a further look at the economic woes caused the country by some companies, the committee has noted the following major infractions which have multiplier effects on other infractions:
“Lifting of some crude oil and gas by oil exploration companies that were not wholly and legally allocated to the consignors in JV, PSC and PSA exploration activities including those whose crude oil certificates of quantity were not signed by the Department of Petroleum Resources and terminal operators.
“Concealment and non-disclosure of some crude oil lifting that ought to have been subjected to Petroleum Profit Taxation at PPT rates ranging between 50 percent of profit for PSC and PSA companies, and 85 percent of profit for JV companies.
“Inflow of foreign investments in the form of equity, foreign cash loans, equipment loans whose utilisations are majorly subject to tax, end up in transactions, foreign transfers that were at variance with the purpose of such inflows.
“Overnight and fictitious disappearance of naira proceeds of foreign inflows from the bank accounts of Nigerian beneficiaries, and subsequent allocations of foreign exchange by CBN for capital repatriations, principal loan repayments and interest payments.
“Multiple foreign exchange allocations to holders of foreign inflow certificates of capital importation (CCI) over and above the amount brought into the country, leading to capital flight of the country’s much needed and scarce foreign exchange.
“Loan backed certificates of capital importations without evidence of transfer to the foreign lenders in the form of principal repayment and interest payments.
“Some expected imports that were funded by foreign equipment loans and other direct allocations of foreign exchange for foreign exchange valid transactions were neither translated to imports nor their import duties paid to the Nigeria Customs Service.
“Capital flight using the Form ‘M’ valid for forex and forex obtained by the beneficiary companies without utilisation of the forex to reflate the economy and taxes paid.
“Export proceeds for both oil and other commodities repatriation by exporters meant to reflate the economy which were diverted by selling directly to other customers without corresponding taxes paid.
“The committee shall extensively review all of the above infractions among others, to ensure that all federally collectible revenues are not only identified and recovered, but also to sanction companies involved in the other non-civil infractions in order to serve as a deterrent to potential classmates of the affected companies.
“These measures shall in the foreseeable future, lead to plugging all revenue loopholes, toward saving the country from recurring upsurges in foreign exchange rates.”
Interfacing with the Managing Director of Citibank, the committee accused the bank of not making remittances to the federation accounts from certain transactions.
“Some of the infractions listed against the bank included outstanding withholding tax collectible on Form A: $2, 544, 973, 484; outstanding VAT collectible on Form A $1, 081, 383, 885; outstanding withholding tax collectible on known Form A bank transfers by customers $927, 556, 300; outstanding VAT collectible on known Form A bank transfers by customers from your bank is $463, 778, 150; breakdown of foreign exchange leakage infractions on form A transactions filed with CBN as taxation services but not traced to the Federal Inland Revenue Service collection platforms $171, 256, 297 and foreign exchange inflow from capital importation yet to be accounted for in the foreign exchange sales voucher is $17, 655, 410, 376.
“Others were Form A transfers for loan repayment and interest with no evidence of capital importation and payment of withholding tax on interest $210, 013, 266; capital importation on loans with no evidence of principal repayment and interest payment of $1, 072, 868, 110; capital importation on equity with no evidence of dividend payment and capital repatriation is $1, 134, 835, 320; dividend transfers in excess of capital importation on equity without payment of withholding tax is $3, 027, 298, 192; Form A transfers for dividend repatriations with no evidence of capital importation, either foreign equity and payment of withholding tax is $305, 725, 840.
“Also, foreign transfers for principal loan repayment and interest payment in excess of capital importation loan without payment of withholding tax on interest is $110, 635, 050; foreign exchange on Form A transferred payment filed with the committee but not traced to CBN returns without payment of taxes is $510, 816, 573; foreign transfer payment by customers to other bank accounts without Form A documentation is alleged to be $30, 720, 856, 807; foreign exchange purchased from oil export process yet to be accounted for in the foreign sales voucher is $132, 878, 000 dollars”.
Culled from daily Independent