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NEITI urges FIRS on comprehensive tax audit

·Dangote contributes 31 per cent to solid minerals revenue

To unravel the issues around tax evasion and multiple tax identification numbers (TIN), the Nigeria Extractive Industries Transparency Initiative (NEITI) has urged the Federal Inland Revenue Service (FIRS) to carry out a comprehensive tax audit.

NEITI, in its 2019 Audit Report, urged FIRS to work with the Ministry of Mines and Steel Development (MMSD) to reconcile the multiple TIN.

The report also recommended that the government, through MMSD, should promote the development of minerals through investments in strategic and metallic minerals to boost revenue.

Also, it urged the ministry to consider having its representatives at the export terminals and borders to validate export clearance permits by exporters and confirm if the applicable royalties have been paid.

Meanwhile, Dangote Cement Plc and Dangote Industries Limited are the highest revenue contributors to the country’s solid minerals sector in 2019.

According to NEITI, the two companies under the Dangote Group, contributed about N778.28 million representing 31 per cent of the N79.96 billion, which the country earned from the solid minerals sector in 2019.

While Dangote Cement’s revenue contribution stood at N635.52 million, Dangote Industries’ contribution was N142.76 million, representing 25.4 per cent and 5.71 per cent of the total revenue received by the government during the period under revenue.

The report named the top five companies that contributed significantly to revenue from the solid mineral sector to include Dangote Cement, Dangote Industries, Lafarge Plc, Julius Berger and Reynolds Construction.

According to the report, out of 702 companies that paid royalties to the government in 2019, only 74 companies met the materiality threshold of ₦3 million.

“These 74 companies accounted for 87.63 per cent of total royalties of N2.50 billion paid in 2019, with the top five companies (Dangote Cement PLC; Lafarge PLC; Dangote Industries; Julius Berger; and Reynolds Construction) paying more than 50 per cent of total royalties,” the report stated.

An analysis of revenue flows from the sector also showed that the sum of N79.96 billion recorded in 2019 was the highest in the past five years. This was followed by N69.47bn and N69.2 billion recorded in 2018 and 2015 respectively.

Besides, N52.76bn was recorded in 2017, while the sector accounted for N41.98bn in 2016. On minerals exported, the report showed that the solid minerals sector accounted for N124.23 billion of the total government exports of N24.275 trillion for 2019, representing 0.51 per cent of total export for the year.

On the contribution of the sector to the economy, NEITI’s report cited data from the National Bureau of Statistics (NBS), which stated that mining and quarrying contributed 0.26 per cent to GDP, higher than the 0.18 per cent contribution recorded in 2018.

“Nigeria’s GDP in 2019 was ₦144.210trillion with contributions from the solid minerals sector totaling ₦368.99billion, representing 0.26 per cent of the total amount”. This shows steady growth in the sector’s contribution to the economy in the past five years, from a contribution of 0.12 per cent in 2015 to 0.26 per cent in 2019.

A sectorial review of revenue distribution of taxes and royalties by the 74 companies showed that manufacturing and construction companies contributed 68.60 per cent and 29.67 per cent respectively in royalty and taxes while quarrying, mining companies and buying centres contributed only 1.73 per cent.

On environmental impact and social expenditure, the report disclosed that ten companies reported environmental expenditures to the tune of N17.13 million. The expenditure covers environmental fees, air quality and waste permits, and registration fees for environmental impact assessment (EIA).

Furthermore, the report disclosed that the Mines Environmental Compliance Department carried out reclamation of seven abandoned mines costing N534.81 million. It also noted that a total of 32 mining sites have so far been reclaimed from 2007 to 2019 costing N2.39billion.

On social expenditure, the report revealed that 44 extractive companies spent N2.598 billion on 557 projects. Apart from the Presidential initiatives on gold, salt and fertilizers, the NEITI report also identified ongoing projects in the sector. They include Gold Mining Development; Mapping of ASM & Buying Centres; and Procurement of Airborne Geophysical Survey; and Integrated Automated and Interactive Solid Mineral Portal (IAISMP).

Others are the development of a geoscience data bank for mineral exploration, development of jewellery and gemstone industry; automation of royalty payment and documentation across the country.

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