Friday, March 24, 2023

Forex: Reps move to block over $30bn annual revenue leakages

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Rayyan Alhassan
Rayyan Alhassan
Rayyan Alhassan is a graduate of Journalism and Mass Communication at Sikkim Manipal University, Ghana. He is the acting Managing Editor at the Daily Nigerian newspaper, a position he has held for the past 3 years. He can be reached via [email protected], or, or @Rayyan88 on Twitter.
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The House of Representatives has resolved to investigate various malpractices in foreign exchange allocation to companies by the Central Bank of Nigeria, CBN, and other sources running over 30 billion dollars annually.

This was sequel to a unanimous adoption of a motion by Rep. James Faleke (APC-Lagos) at the plenary on Thursday.

Moving the motion earlier, Mr Faleke said that it was public knowledge that the economy performance of the country is low at this critical time

Mr Faleke said that in the past years, Nigeria had not been able to fund capital aspect of its Appropriation Act year in year for lack of funds due to low remittances of revenue by revenue generating agencies.

He identified low payment of taxes by private companies and diversion of expected revenue by corporate organisations as other factors responsible for the inability of government to fund the budget.

“The crude oil price bench mark in 2020 Appropriation Act was put at $57 dollar per barrel but the price of crude oil in the international market has dropped to 47 dollars per barrel.

“This clearly indicates that the major source of revenue towards funding the 2020 Appropriation Act is already in the negative.

“There is an the urgent need to rescue the country from over $30 billion dollars annual revenue leakages arising from tax evasion, malpractices, mis-use and diversion of foreign exchange allocations by companies and other entities,” he said.

Mr Faleke said that invoices overstatement by importers with the intention of obtaining large forex allocation above the international cost, insurance and freight value of goods were increasing the domestic inflation rate.

He alleged that the fiticious transfer of forex allocation for the payments of dividends to foreign shareholders of Nigerian companies above the dividend approved by the company’s board of directors and audited accounts was leading to evasion of statutory 30 per cent Company Income.

Mr Faleke said that allocation of foreign exchange to companies for the repayment of principal foreign loan and interest that were in some cases found to be non-existing.

READ ALSO: CBN injects $218.41m, CNY 18m into retail secondary market

He said that millions of dollars in forex allocation to companies for the purpose of payment of foreign vendors for services rendered in Nigeria were in most cases found to have evaded the then statutory five per cent VAT and seven per cent withholding Tax.

Mr Faleke said that the value of imported physical goods, materials, equipment on account of forex allocation by most companies were always understated to Nigeria Customs Service, NCS, at the port of arrival in order to reduce import duty payable.

He said based on verifiable information, importers at the post clearance stage do not reflect the value of 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.

The house resolved to conduct an investigative hearing to look into the various originating documents maintained by CBN, Banks, Forex Dealers, Federal Inland Revenue Services, FIRS, Importers and other beneficiary companies.

The lawmakers said they would identify perpetrators and the atrocities committed based on verifiable documents obtained from the valuable records.

The green chamber said it would make necessary recommendations toward the correction and regularisation of the problems with the aim of putting a stop to the menace in the future.

The lower chamber said it will review statutory provisions/amendment for penalties as provided in the applicable Law for various related offences as a deterrent to others.

In his ruling the Speaker of the House, Rep. Femi Gbajabiamila mandated relevant committee to conduct the investigation and report back in 12 weeks.


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