The House of Representatives has on Thursday vowed to investigate the Central Bank of Nigeria, CBN over an alleged loss of over 30 billion dollars annually.
The loss according to the House Representative was as a result of revenue leakages arising from tax evasion, malpractices, misuse and diversion of foreign exchange allocations by companies and other entities
In it’s plenary, the House adopted a motion to investigate the disbursement of foreign exchange by the Central Bank of Nigeria and other agencies with a view to determining the exact amount that may have been lost by the government in the process.
Honourable James Abiodun Faleke, the sponsor of the motion said: ”There was urgent need to rescue the country from over 30 billion dollars annual revenue leakages.”
He alleged that the leakages arose from various malpractices in foreign exchange allocation to companies from sources such as CBN, autonomous, interbank, domiciliary and over the counter purchases for importation of physical goods.
Other are payments of foreign service vendors, dividend repatriation, foreign loans and interest payment including foreign currency-denominated contracts payment by companies in engineering, procurement, construction, installation and marine transportations.
The House, however, resolved to conduct public hearing by looking into the various originating documents maintained by Central Bank of Nigeria (CBN), Banks, Forex Dealers, Federal Inland Revenue Services (FIRS), Importers and other beneficiary companies as well as identify perpetrators and the atrocities committed based on verifiable documents obtained from the valuable records.
The investigation is also to determine in a statutory and in a professional manner, the revenue amount involved in the malpractices by each organization based on every revenue line item collectable by agency of Government for the purpose of timely recovery into Government accounts.
Presenting the motion on the floor of the house, Rep. Faleke expressed concern over the low performance of the country’s economy at this critical time.
He said that in the past years, Nigeria has not been able to fund capital aspect of its Appropriation yearly as a result of the lack of funds due to low remittances of revenue by revenue-generating agencies, low payment of taxes by private companies and diversion of expected revenue by corporate organisations.
Faleke who heads the House Committee on Finance reminded the House of the fact that the crude oil price benchmark in 2020 Appropriation Act was put at $57 dollar per barrel while the price of crude oil in the international market has dropped to 47 dollars per barrel.
He said the implications of this was that the major source of revenue to fund the 2020 Appropriation Act is already in the
He alleged Pro-forma invoices overstatement by importers with the intention of obtaining large forex allocation above the international cost, insurance and freight value of goods, thereby increasing the domestic inflation rate.
He also alleged fictitious transfer of forex allocation for the payments of dividends to foreign shareholders of Nigeria companies above the dividend approved by the company’s board of directors and audited accounts thereby leading to evasion of statutory 30% company income Tax thereof.
Feleke also said that allocation of foreign exchange was being made to companies for the repayment of principal foreign loan and interest that were in some cases found to be non-existing, but were rather a fictitious loans backed by a mere packaged documents without evidence of utilization in Nigeria and related taxes paid.
According to him, in some cases, companies were allocated foreign exchange for the purpose of investment of same in other countries stocks like the United State Treasury Stock, that neither contribute to federally collectable revenue nor reflate the Nigeria economy.
He also disclosed that there was gross abuse of millions of dollars in forex allocation to companies for the purpose of payment of foreign vendors for services rendered in Nigeria while the companies were in most cases found to have evaded the then statutory 5% Value Added Tax (VAT) and 5% With Holding Tax accordingly.
Rep. Faleke alleged further that the value of imported physical goods, materials and equipment on account of forex allocation by most companies were always under-declared to Nigeria Customs Service at the port of arrival in order to reduce import duty payable.
According to Faleke, available verifiable information have it that importers at the post-clearance stage do inflate the value of these items in their books in order to obtain frivolous capital allowance or expense claims from FIRS which ultimately deny the Government of much-needed revenue from Company Income Tax and Education Tax.
He further revealed that companies operating in offshore engineering, procurement, construction, installation and transportation whose forex funding source are from cash calls and, operators sourced foreign loan do pay their foreign vendors billions of dollars in contract payments on an annual basis without any significant payment of all applicable Taxes, Levies.
Some of these companies are not incorporated in Nigeria nor have an affiliate in Nigeria as statutorily provided for in the Companies and Allied Matters Act.
The House Committees on Finance, as well as Banking and Currency who are to carry out the investigation, should make a formal report of findings and provides necessary recommendations toward the correction and regularisation of the problems aimed at putting a stop to the menace in the future and advice the House on the statutory provisions/amendment for penalties as provided in the applicable Law for various related offences as a deterrent to others.