Nigeria: Checking elite oil theft and tax evasion

The Federal Government’s call for a collective action against crude oil thieves and elite conspiracy against the Voluntary Assets and Income Declaration Scheme (VAIDS) is timely. It has come at the most auspicious time that the nation needs more revenues. The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mele Kyari, recently accused  a few Nigerians he described as the “elite” of stealing yearly over 42 million barrels of the nation’s crude oil worth $3.6billion at the prevailing price of $85 per barrel in the Internet international oil market. 

The fact that Nigeria is yet to put in place a technological device that will record the exact daily crude oil production may put the stolen crude oil much higher than reported. The NNPC boss broke the news of the economic sabotage at the 17th All Nigerian Editors Conference 2021 in Abuja. Apart from the loss of revenue due to oil theft, NNPC says it spends billions of dollars annually to repair and maintain pipelines vandalised by criminal activities.

In a related development, elite sabotage has equally trailed the hitherto hailed VAIDS initiative. Government says this has made the much-celebrated programme not to achieve its target. Launched four years ago, VAIDS was aimed at providing an opportunity for corporate organisations and individuals to regularise their tax status relating to previous tax periods. The tax amnesty programme was also designed to block noticeable leakages in the nation’s tax system. Under the scheme, taxpayers were given waivers of outstanding overdue interests and penalties. 
In addition, it offered a grace period of between July 2017 and March 2018 for all tax defaulters to voluntarily pay back to the Federal Government’s coffers their arrears. Government had targeted N350billion revenue in two years to come from VAIDS, but had only raised N70billion as at 2020. However, the Pandora Papers expose showed that some prominent Nigerians invested their wealth in tax havens, ostensibly to evade payment of the required taxes at home. This is in spite of assurances in the VAIDS guidelines that they would face no criminal prosecution.

   It is disheartening that tax remittance in the country is still low despite the fact that Nigeria has some of the most profitable and well capitalised companies in Africa. Worse still, some Nigerians are reported to have made billions of dollars through crude oil theft at the detriment of the economy. For instance, in 2019, the Nigeria Extractive Industries Transparency Initiative (NEITI) said the country lost 42.25 million barrels of crude oil through theft.  This has increased the inequality in the country, with about one per cent of the population controlling the wealth of the country.  Also, a recent report by Oxfam Group said that between 1960 and 2005, about $20 trillion was stolen from Nigerian treasury by public officials, including politicians.                                                                 
On account of crude oil theft and tax evasion, the economy has become distressed, and recovery may be far off. Last year,  the Executive Chairman, Federal Inland Revenue Service (FIRS), Muhammad Nami, disclosed that between 2007 and 2017, Nigeria lost over N5.4 trillion through tax evasion by multinationals doing business in the country. The foreign companies and the nation’s tax officials should be blamed for such financial malfeasance. Nigeria’s tax system is fraught with corruption.  The reported conspiracy of the elites amounts to economic crime that must be thoroughly investigated by the Economic and Financial Crimes Commission (EFCC), and those found liable duly prosecuted in accordance with the laws of the land. The mere disclosure of the oil theft and tax evasion is not enough.
The draining of our foreign exchange reserve, reduction of tax revenue collection, poor investment inflows and escalation of poverty in the country must be quickly tackled. These are drivers of the current economic crisis. It bears repeating that until the multinationals are made to comply with our tax laws, so long will the country continue to record huge revenue losses.                

Unfortunately, the amount lost in the past six years to tax evasion by multinationals is more than 40 percent of the 2021 budget. That will also be enough to take care of the budget deficit of N5.3 trillion. Therefore, we urge the National Assembly and the anti-graft agency to check crude oil theft and tax evasion and put in place measures that will make tax evasion a crime with tougher sanctions for all offenders, including unscrupulous Nigerian tax officials. With weak revenue generation and poor investment in the economy, there is need to restructure our tax laws with a view to discouraging offshore investments, while oil thieves are given condign punishment.   

Sun News Online