Nigeria’s unfavourable tax laws, 14% import duty threaten planned national shipping line
There are indications that Nigeria’s unfavourable tax laws on ship acquisition and 14 percent import duty on new vessels would dash the hope of Nigerian ship owners to establish a national shipping line that would fly Nigerian flags.
This was the main reason the Memorandum of Understanding signed between Nigeria and a Singaporean firm known as Pacific International Lines (PIL), in August 2016, for the establishment of national carrier/fleet status on 40 percent foreign ownership and 60 percent Nigerian ownership, is yet to commence.
Speaking to newsmen on Friday, in a media conference to announce the 2017 Annual General Meeting of the Shipowners Association of Nigeria (SOAN), in Lagos, Greg Ogbeifun, president of SOAN, said that Nigeria’s unfavorable tax laws has discouraged the Singaporean firm from pushing through with the agreement.
“After we had signed the MoU in Singapore with PIL, the company came up with issues regarding our local tax laws. First, PIL made reference to our local laws that will not make the agreement viable and they said that unless some of these laws were reviewed, it will be hard for them to fly the Nigerian flag. That was the biggest setback for that MoU,” Ogbeifun said.
Ogbeifun, who noted that countries like Malta turned around its maritime administration by reviewing its tax laws and making them attractive for international participation, said that in Nigeria, import duty on canoe, tugboat, speedboat or a tanker is about 14 percent of the sum total cost, which makes the business uncompetitive.
“In America, when a ship owner buys a crude oil tanker for $100 million and take it to America, the person will pay zero duty as long as it is flying an American flag. The same is obtainable in countries like Britain and Greece but if you bring it to Nigeria, you will pay $14 million even when it is flying Nigerian flag,” he said.
According to the SOAN boss, the tax policy is also affecting the local ship owners investing into the acquisition of crude oil tanker. “We have to decide if we want these things to happen in Nigeria. And if yes, we must review our laws, just like the government of Malta did.
He noted that the disadvantage in taxing such vessel heavily was that such ship cannot operate competitively with foreign flagged tankers in the same market, “so automatically, the Nigerian flagged tanker is already disadvantaged.”
“That was one reason PIL slowed down on the MoU it signed with the Nigerian government. PIL put it in writing that unless these tax laws are reviewed, it won’t be able to fly the Nigerian flag.”
Big Read |