Kemi Adeosun, Nigeria’s finance minister said the country is planning to make gas flaring more costly for companies that have escaped the payment of billions of dollars despite being fine.
In an interview with the Bloomberg news service, monitored by Businessamlive.com, Adeosun said that in the “legal framework for the gas-flaring penalty, it was drafted as a charge. A charge is tax-deductible”. “So, what do the international oil companies do? They flare, they pay the charge on which they get tax relief. That’s just bad drafting.”
The government of Africa’s top oil producer is approaching lawmakers to amend the law and have the word ‘penalty’ replace ‘charge’, the minister said in her office in Abuja. “Just that one word has potentially cost us billions of dollars.” Oil companies flare natural gas that is produced along with crude instead of harnessing it because that can be costly or difficult for security reasons. Nigeria has sought to limit the practice over the years as it pollutes the environment and contributes to global warming. The West African nation is recovering from a contraction of its economy in 2016, the first in 25 years, and is seeking revenue sources to plug a $25 billion infrastructure gap and fund a record 2018 budget presented in December by President Muhammadu Buhari.
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The minister lately, said that Nigeria in the past never focused much on tax revenue because of its oil income that funds most of the government spending. However, the government is updating the tax law and going after defaulters, with the intention to boost collection and raise the country’s tax-to-GDP ratio, currently at 6 percent and among the lowest in the world.