By Christiana Ekpa
The House of Representatives has summoned the Federal Ministry of Industry, Trade and Investments, the Attorney General of the Federation and the Federal Inland Revenue Service to appear before it to clarify why some companies are not given certificate of acceptance before being allowed to claim capital allowances running into several millions of dollars to enjoy tax holiday.
The summon followed a disagreement between the House Committee on Public Accounts and the Management of Nigeria Agip Oil Company over the desireability of certificate as a prerequisite for enjoying tax holiday by companies operating in the company.
The Committee Chairman, Rep. Wale Oke (PDP, Osun) insisted that the certificate of acceptance was a necessity to claim capital allowances and enjoy tax holiday, the Divisional Manager, Tax and JV Coordination, Oluwole Agbede, said the certificate was not needed because of the nature of their work.
Responding to why Total Exploration and Mobil Producing should have such certificate and Agip does not, Agbede said the two companies could have such certificate for the off shore operation.
Agbede said the company has three sister companies that share same management and same cost as well as file transfer same transfer pricing reports.
He said the company does not have certificate of acceptance from the Federal Ministry of Industry, Trade and Investments to claim capital allowances from the government.
Asked why the company does not have the certificate, he said under the Petroleum Profit tax, the certificate was not a requirement to claim capital allowances.
Asked if there was any company exempted from having the certificate or if there was an exemption to the rules on capital allowances, he said “I can’t say specifically that there is some form of exemption. But with the nature of the business we operate, which is oil and gas and the regulator which is the NNPC and DPR, there are stringent budget approval process that is carried out before we spend any amount.
“We claim capital allowances based on the 20 percent of the JV agreement that belong to us. We have a JV agreement and the NNPC is the principal partner with 60 percent of the assets of the operation.
“The other JV partner, Oando has 20 percent, while Agip has 20 percent. When we incure the expenses, we distribute a d bases on that, we share the percentage. Each of the partners will go back and prepare it’s tax return based on the share of the oil.”
But Oke said the industrial inspectorate Act does not provide for any exemption on who should have the certificate of acceptance and who should not.
He said “I have the industrial inspectorate act with me here and there is no form of exemption. Why would you forfeit your money and the requirements for me to agree with you that you should enjoy some allowances is the certificate.
“Why would Total and Mobil obtain certificate of acceptance and you would not?
“If you come to me to claim capital allowances without acceptance certificate, why should I accept it? It is a requirement in law. The fact that you are in JV agreement and that there is an approval as well as the fact that the assets are co-owned, what will make FIRS agree with you? What will make the parliament agree with you that the allowances you claimed to enjoy tax holiday is apt without acceptance? It is common logic because what you are saying does not add up.
“Ordinarily, we simply ask FIRS and Federal Ministry of Industry to be here. We can develop our legislative activism and ask the three of you to come here because they are saying that you are short changing them because you are not paying what you are supposed to pay because you are claiming capital allowances. The Auditor General faulted that.
“Where is your certificate? If you have problem getting your certificate from the Ministry, tell us. You have not even applied for it because you thought you don’t need it. I am telling you that I have that law here with me and there is no exemption.”
He directed the Clark of the committee to write a letter inviting the Ministry of Industry, Attorney General of the Federation and yen Federal Inland Revenue Service to sit with the company and iron out the issue.
He said the hearing was because the ‘Auditor General observed that some companies are in the habit of claiming capital allowances to reduce their tax exposure without certificate of acceptance from Federal Ministry of Industry. That is why we are here.
“The last time you were here, the gentleman who handles your procurement and logistics said you made payment to Oil and Gas Free zone without reciept.”
Chairman of the Committee who insisted that the company was not under investigation said they were to give evidence and help the government recover money that may have been paid, but not accounted for.
He said “your sister company, Total Exploration was here and they helped us to recover millions of dollars that were paid to the Oil and Gas Free zone, but not accounted for.
“We are on a fact finding mission. So, if you are a licensee of Oil and Gas Free Zone, we are asking, where is your license, when did you enter the zone. Agip is an old company and when they entered Nigeria, I was not born then and the Oil and Gas Free Zone was created recently. So, when did you enter the zone?” he said.
Oke explained that one of the reason for the public hearing was to decide whether the free zone authority was desireable
“ I am just wondering why somebody will pay 196,000 dollars and no reciept was issued to you and no license was issued to you,” he said.
