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BUSINESS REVIEW: Why big industry players may suffer demeaning allegations from tax authorities

FIRS says tax evasion by IOCs cost Nigeria $250b yearly
  • The golden fish syndrome
  • Fowler vs Buhari –tax remittance query
  • GIG Motors vs FIRS –case study
  • Tips to refute wrong allegations

Following the recent crossfire between President Muhammadu Buhari (PMB) and the Chairman of the Federal Inland Revenue Service (FIRS), Tunde Fowler, where PMB reportedly expressed his displeasure –querying Fowler on the agency’s inability to achieve anticipated revenue projection; we have seen a rather aggressive FIRS with Fowler’s spontaneous defense of the agency and his justification to what played out, resulting to the alleged failure of the agency in meeting its target.

Experts have attributed this charge, from the presidency, to one of those likely reasons the agency recently published a list of tax defaulters. But, how true?

The story:

As captured in the news, the president had earlier pointed out, in a query to Fowler signed by the Chief of Staff to the President, Abba Kyari, that total value for tax remitted covering for the period 2015 to 2017 dropped below remitted value as against the period 2012 to 2014. Baffled, by the tax report showing remittance pegged at N12, 656.30 trillion for the former and N14, 527.85 trillion for the latter. Hence, demanded that the FIRS boss tabled an explanation.

Acknowledging the correctness of the allegation, Fowler explained, in response to the query, what led to what the president had described as discrepancies –citing major micro-economic factors. According to Fowler, crude oil production drastically reduced along the timeline under review, influencing tax accrued from oil revenue. Aside the drop in production of oil, he also revealed that price of crude oil fell significantly and is yet to recover to what it was.

Comparing dates – crude oil production 

  • 2012: 2.31mbpd
  • 2013: 2.18mbpd
  • 2014: 2.20mbpd
  • 2015: 2.12mbpd
  •  2016: 1.81mbpd
  • 2017: 1.88mbpd

What about crude oil price?

While the nation was still struggling to deal with the falling trend of crude oil production, the sudden crash in the price of crude oil also delivered a dent on the accruable revenue from oil.

  • 2012: $113.72
  • 2013: $110.98
  • 2014: $100.40
  • 2015: $ 52.65
  • 2016: $43.80
  • 2017: $54.08

Without adding the crippling effect of recession on GDPthe understanding of these factors put forward, thus, explains what led to the fall in revenue generated from oil and the corresponding tax as remitted.

FIRS on its toes

The body language of the agency after the Fowler-Buhari exchange has observablychanged. Perhaps, the agency has swung into action by way to send a message of pro-activeness to the presidency. Barely 24 hours after Fowler submitted his response to the query levied against him; the agency published an alleged controversial list of tax defaulters which courts the attention of the public as it contained names of big industry players.

That the list has been refuted by some of the accused listed tax defaulters castsdoubts on the mind of the public to re-query the agency of lack of professionalism should some accused defaulters come clean off the placed allegation. The list,according to press report, contained 19,901 individuals and organizations who had defaulted on tax payment in the country.

On the FIRS list are high profiled individuals and leading organizations to include:

  • Obasanjo Farms Nig. Ltd (Feedmill);
  • Iyiola Omisore & Par;
  • Citiroof Aluminium Co. Ltd;
  • Coldstone Creamery Limited (Yaba);
  • Davido Music Worldwide Ltd;
  • Grand Square Supermarket and Stores Ltd;
  • Open Heavens Bliss Enterprises;
  • and leading transport company, God is Good Motors (GIGM).

Ongoing saga between GIG Motors and FIRS – case study

In the long list of 19,901 entities accused of defaulting on tax remittance grounds, GIGM has stepped out to reprobate FIRS of committing an inclusion error, thus, charging them to expunge its name with immediate effect from the list.

Read also: GIGM to FIRS: Remove our name from list of tax defaulters

In a press release, signed by the finance director, Mr. Joseph Osanipin, GIGM explained that the bank account in question (with Zenith Bank) belonged to the GIGM Company and not a different entity. According to the release, the company claimed, “all documented tax liability fully paid up as demanded by the service.” It further alleged, “a malicious attempt” to smear its image, adding that not “even a demand notice served on us as stipulated  in the FIRS Establishment Act Section 32 (d)….”

GIGM appears to have its arguments well laid out. According to the provision by law, requiring FIRS to write to defaulting entities before taking actions, the blame can only land its weight on the agency’s table with queries served across board amongst its officers.

How many other large companies will suffer this?

It won’t be anything surprising to find other companies in the shoes of GIGM. The chances are high as 19,901 is quite a long list. Running multiple accounts has its accorded advantages; however, a case of wrong allegation like this is basically one of those demerits of it as far as business administration is concerned.

Recall that agencies like the FIRS have classified access to pieces of confidential information about you or your company. Some of them (for instance) have vested authority to take over your bank account or call for it to be frozen should a cause call for it.

Tips to refute wrong allegations

When you encounter challenges like this, you really don’t need to panic. You can learn a thing or two from the GIGM case. Instead of getting unnecessarily nervous, rise confidently to address the issue. It’s your fight. A good way is writing the institution or publishing a rejoinder in any national daily to disclaim the allegation. And, sometimes, you might require the service of a lawyer.

Also, there is the golden fish syndrome, where the media can play on your case to sell their bulletin. From time immemorial, scandals of any kind sell faster and spread farther than good news. You might just be the next fish in the fry.

Be guided, even when you are innocent of an allegation, never overlook as it might be detrimental to you or your brand. If it doesn’t affect you directly, your partners, customers or fans might slack. In business, it is your duty to protect your image before the public, and allegations as defaulting on tax remittances say a lot on how much you comply with regulations. Play safe!

By Ridwan Adelaja…

 

Ripples Nigeria

We are an online newspaper, very passionate about Nigerian politics, business and their leaders. We dig deeper, without borders and without fears.
www.ripplesnigeria.com

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Ripples Nigeria

We are an online newspaper, very passionate about Nigerian politics, business and their leaders. We dig deeper, without borders and without fears.
www.ripplesnigeria.com

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