The House of Representatives Committee on Public Account has invited Director-General, Federal Inland Revenue Service, Muhammad Mami over tax clearance certificate issued to Procter and Gamble (P&G), a U.S. company operating in Nigeria.
This invitation followed the adoption of a motion by Zakaria Nyampa (PDP-Adamawa) at an investigative hearing on Tuesday in Abuja.
The committee was investigating revenue remittances of the company between 2016-2018 based on a query raised by the Office of the Auditor General of the Federation.
Moving the motion, Nyampa said that under the years under review, the turnover of P&G was N42 billion, N41 billion and N48 billion and its profit was nil.
He said there was the need for FIRS to authenticate the clearance certificates displayed by P&G and explain reasons for its issuance.
“Chairman, permit me to take this as a motion, some of this year under review, 2017, 2016, 2018 where their turnover was N42 billion, N41 billion and N48 billion and their profits were nil.
“And FIRS went ahead to give them tax clearance, I want to move a motion that we invite FIRS to authenticate these certificates.
“And what are their financial returns, the things they find that FIRS was convinced that these people should not pay tax for those years under review, I so move Mr Chairman,” he said.
Seconding the motion, Solomon Karen (PDP-Plateau) said he was worried about the development.
He said that as a Nigerian, he was deeply concerned about the issue, stressing the need for an in-depth investigation.
The Chairman of the Committee, Wole Oke (PDP-Osun) in his ruling, directed the Clerk of the House to ensure compliance.
Oke explained that issuance of tax clearance certificate does not always depend on payment of tax.
“Tax payer could be issued tax clearance certificates on several bases; it could also be tentative tax clearance certificate, maybe there is a business to pursue and they need tax clearance urgently to do so, they can be obliged.
“But once the financial year has come to an end, all the filing ought to be done; my worry is that, even though we have other options of assessing tax payer even when your operation resulted in a loss, we have other options.
“We can look at turnover basis, we can look at net current assets and all that; I am shocked that those options were not applied and yet your tax assessment read zero.
“Those are the issues, we cannot shave the head of FIRS in their absence, they need to come here and tell us their own side of the story why we have this kind of situation,” he said.
Oke said that there was the need to look into the import duty documents of P&G, saying that the company imported equipment worth N6.4 billion in 2017
“If you look at the acceptance given to you dated March 6, 2017, your foreign content was N6.4 billion for value of foreign content, machinery and equipment.
“We need to look at their asset register in their versions audited account and their value on this certificate of acceptance along with their import duty paid on the equipment imported worth N6.4 billion.
“The documents you need to give us now are your import duty on the plant equipment and machinery.
“On your taxes, we will call FIRS to come and defend their decision to give you zero tax assessment which means you did not pay education tax neither did you pay company income tax,”he said.
Earlier, Financial Director of P&G, Ogunbodele Emiola, explained to the committee that in the years where profits were made, education tax was paid.
She said the operating business environment in the country in recent years had been very difficult.
“We have made significant investment, we have built a factory, the biggest and highest investment by any U.S. company in our industry in Nigeria and that was done during the period under assessment.
“We have invested a lot of efforts to turn around the business however, that has fallen short of the returns we expected to deliver in that period.
“We have to make a very difficult decision to shut down that factory,” she said.