Automobile industry - Nigeria loses US$566 million to tax evasion in auto industry - Nigeria has lost over 90 billion naira (US$566 million) to tax evasion through gray market operations in the automobile industry since 2008, according to a new report released by the Lagos-based Financial Derivatives Company Limited (FDC).
The private Guardian newspaper reported Wednesday that the figure was arrived at after a survey of the nation’s import profile during the period under review.
FDC Chief Executive Officer Bismark Rewane described the loss as 'mind boggling”, adding that the figure was equivalent to 4.5 per cent of the total exports of Kenya or four per cent of the total exports of Ghana.
“This amount could fund the construction of one petroleum refinery or a modern power station with 1000 Mega Watts capacity,” he said.
The financial expert explained that gray market thrives when goods are imported inappropriately into an economy without the manufacturer’s consent, thereby short-changing the authorised dealers.
However, the authorities of the Nigeria Customs Service (NCS) claimed to have surpassed the projected revenue over the same period due to some stringent measures put in place to check leakages of revenue.
But Rewane insist that the revenue loss was too staggering when viewed on a leveraged basis, saying it can finance the rehabilitation of two seaports and two modern airports.
He said while direct tax loss comes from the reduced sales and profit in the legitimate automobile industry, indirect tax loss comes from the custom duties and excises.
“The bulk of the loss comes from the indirect taxes based on FDC’s survey. Recent data from the CBN shows that a fall in customs and excise duties was one of the reasons the Federal Government non-oil receipts declined by 30.3 per cent to N589.98 billion (US$3.7 billion) in the last quarter of 2012.
“From our investigations, the continuous decline in government customs receipts can be due to either a reduction in national import, or to increased importation through the gray market, leading to avoidance of duty payment by gray market operators and corruption at the ports,” he said.
He said data collected from the Nigeria Port Authority (NPA), Manufacturers Association of Nigeria (MAN) and through independent survey of the automobile industry shows that grey import is striving and almost at par with official import volumes.
Rewane said in some cases, automobiles that are destined for land-locked nations such as Burkina Faso, Niger, Chad and trans-shipped through the ports find their way to the Nigerian market and custom duty payment avoided in the process.