EXCLUSIVE: FIRS demands evidence of remittance of $2m tax by General Electric

The Federal Inland Revenue Service (FIRS) has demanded evidence that General Electric International Operations Nigeria Ltd remitted the excessive tax it withheld from Arco Group Plc, a Nigerian oil servicing company, for nine years.

TheCable had reported that GE withheld tax of over $3 million from its payments to Arco for services rendered between 2006 and 2015.

GE deducted 10% as withholding tax for a servicing contract from 2006 to 2015 — as against the 5% stipulated by Nigerian laws.

Arco had petitioned FIRS seeking explanation over the deductions, and Tunde Fowler, the executive chairman, wrote to confirm that the rate for technical services was 5% while the one for rental accommodation was 10%.

Not satisfied with Fowler’s response, GE engaged the services of tax consultants, PricewaterhouseCoopers Ltd, who insisted that what Arco offered was “technical services” and the appropriate rate was 10%.

PwC contended that Arco’s services rendered by manpower were technical in nature because of the involvement of “craftsmen” and “technical specialists”.

In the letter written by Chijioke Uwaegbute, PwC’s director of tax and regulatory services, the consultants said in the event that FIRS maintained its position that 5% was the applicable rate, the revenue service should confirm the treatment of the excessive deductions.

Fowler, in his response date July 26, 2018, said the FIRS circular in question classified the supply of personnel, personnel protective equipment and uniforms, office equipment and furniture, vehicles and fuelling as contained in the contract document could only be charged 5% withholding tax (WHT).

The deductible rate for site accommodation or rent, he said, was 10%.

Fowler then demanded evidence that GE remitted the WHT deducted from Arco over the nine-year period.

Arco can apply for a refund of the excess deduction, he said, “so long there is evidence of remittance to FIRS account”.

He further said GE must make available to Arco “all outstanding WHT Credit Notes in respect of remittances made in its favour”.

General Electric previously told TheCable it would not comment “due to the confidentiality provisions” governing the contract it had with Arco.

The sums in contention are €56,577.61, $2,923,642.36  and N360,482,041.19.