House to Probe Abuse of Import Duty Waivers, Customs ICT Infrastructure

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  • Investigates alleged N115bn tax liabilities in MDAs, non-remittances by banks

James Emejo in Abuja

The House of Representatives wednesday passed a motion mandating its Committee on Customs and Excise to investigate the abuse of import duty waivers granted by the Federal Ministry of Finance and their effects on the economy.

The committee was further authorised to determine the nature and extent of abuse of the Customs Pre-Arrival Assessment Reports (PAAR) by importers and officials of the Customs Service in order to recover the revenues due to the Federal Government but was not paid.

The motion on the need to investigate the handling of import duty revenues, waivers and bonds on import duties collected by the Nigeria Customs Service from 2010 to date sponsored by Hon. James Abiodun Faleke and 13 other members also seeks to identify the companies or individuals that have refused to redeem the bonds even after clearing their imports

The committee is expected to report back in 90 days for further legislative action.
The lower chamber also passed a motion urging the Federal Ministry of Finance to look into its Agreement with Webb Fontaine with a view to exploring the option of handing it over to the Nigeria Customs Service as already done by other Service Providers and also set up a Compliance Monitoring Team that will liaise with the Nigeria Customs Service to further utilize its ICT Infrastructure towards conforming to the World Customs Organization standard.

It mandated the Committee on Customs and Excise to investigate the operational activities in the Nigeria Customs Service ICT Infrastructure between 2013-2017, violation of its ASYCUDA Time-Line Agreement, Rules of Engagement and the delay in handing over to Nigeria Customs Service when other Service Providers did so in December 2013, and report back in six weeks for further legislative action.

The resolution followed a motion sponsored by Hon. Jerry Alagbaoso and nine other members on the need to investigate the operational activities of Webb Fontaine Nigeria Limited in the Nigeria Customs Service Information and Communications Technology (ICT) Infrastructure between 2013 and 2017, the violation of Its Automated System for Customs Data (ASYCUDA) Time-Line Agreement, Rules of Engagement and Delay in the Handover of its Services to the Nigeria Customs Service.

Also, yesterday, following a motion sponsored by Hon. Jerome Amadi, the green chamber mandated its Committees on Finance and Public Accounts to investigate allegations that Ministries, Departments and Agencies (MDAs) of government owe ₦115 billion tax liabilities and that some taxes collected by banks were not remitted to the Federal Inland Revenue Service (FIRS).

The probe will seek to determine the amount each MDA owes and for how long the amount had been withheld; make recommendations on how to prevent re-occurrence of the illegality and report back within six weeks for further legislative action.

However, Faleke had stated among other things that the Customs Service customarily issues Pre-Arrival Assessment Reports which are used to assess duties payable on imported goods but the reports are sometimes compromised by importers, thereby leading to underpayment of duties in billions of Naira.

He said the Ministry of Finance gave series of duty waivers to companies in line with the policy of the government to assist businesses, but in most cases, the waivers were used to import goods not listed on the approval, thereby depriving the government of the needed revenues.

On the other hand, Alagbaoso noted that Webb Fontaine Nigeria Limited is one of the Service Providers for the import and export trade facilitation within Nigeria Customs Service ICT Infrastructure.
He recalled that while other Service Providers including Cotecna, SGS and Global Scan which operated in the various seaports, airports and borders handed over their operations to the Nigeria Customs Service on 1 December, 2013, Webb Fontaine never did for some curious reasons.

He said the company had transferred almost all its shares to Hong Kong and is left with one share as stated on the deed of transfer of shares Forms 2006 which raises the question of whose economic interest that is being protected by the transfer of nearly all its shares abroad, more so when Hong Kong is not under Nigeria’s jurisdiction.
He further expressed concern that the transfer of the shares to Hong Kong implies that when Webb Fontaine wins a huge service contract in Nigeria, a major chunk of the profit will be transferred offshore to Webb Fontaine Hong Kong.

Meanwhile, Amadi, in his motion expressed concern over the low culture of individual and corporate organizations’ tax compliance, despite taxation being the means through which governments can earn extra revenues to bring about the much-desired development to the country, especially in the face of declining revenues from crude oil.

He said the recent allegation by the Revenue Mobilization Allocation and Fiscal Commission (RMAFC) that some MDAs are owing the Federal Government ₦115 billion constituted a serious issue that should not be allowed to be swept under the carpet, given that those funds could have either been mismanaged or squandered by those Agencies;
He pointed to a similar allegation by the then acting Chairman of the Federal Inland Revenue Service (FIRS), Mr. Kabir Mashi on September 3, 2017, at a forum in Abuja that the FIRS was losing huge revenues through MDAs that award contracts to companies without Tax Identification Number (TIN).

According to him, deductions made for Withholding Tax (WHT) or Value Added Tax (VAT) and remitted through Banks are often not transferred to the FIRS.
However, lawmakers passed all three motions without a debate because they are investigative in nature.