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EFCC uncovers N6.3b tax rip-off by airlines, NCAA officials

Source: pointblanknews.com

The Economic and Financial Crimes Commission (EFCC) is set to prosecute no fewer than 25 directors of 10 airlines and officials of the Nigerian Civil Aviation Authority (NCAA), over alleged evasion of N6.35 billion tax.

According to investigations, about 18 airlines had evaded tax amounting to N9.1billion. But while eight paid up after reconciliation, 10 others are still foot-dragging on their outstanding tax remittance of N6, 358,050 billion. Out of the N6.3billion, the EFCC has recovered only N264.5 million from six out of the 10 airlines.

It was learnt that some of the 10 airlines have admitted in writing to the commission that they have outstanding tax liabilities and levies in the last three years which they have not paid to the government. Some of the taxes and levies were collected upfront from passengers by the airlines but were not remitted to the appropriate authorities as required by the enabling laws.

These taxes include Value Added Tax (VAT) 5%; PSC; Ticket Sales Charge; Company Income Tax; Education Tax and 5% Cargo Sales Charge statutorily due to the NCAA. A highly-placed source said: "Some NCAA officials have been fingered in the heavy tax liabilities of the various airlines operating in that sector. We may also interact with some workers of the Federal Airports Authority of Nigeria (FAAN).

"But these NCAA officials were found to have colluded and conspired with some of these airlines to evade 5% Cargo Sales Charge (CSC)."In one instance of Allied Air Limited, which has affixed wing cargo charter contract with the CBN and DHL since 2005, the EFCC discovered that the total tax liability of the airline (which comprises VAT, Company Income Tax and Education Tax) is N41, 647,477.94 and $57,095.53 as NCAA's 5% CSC.

"This same company was never invoiced by NCAA for the payment of CSC on CBN bullion charter since the inception of the Act in 2006."Concerning Top Brass Aviation (TBA) Limited, it is operating charter for Total E &P Nigeria Limited without paying 5% CSC due to the NCAA and other taxes."TBA misrepresented the company to NCAA as private flight management company in order to evade taxes and levies. TBA obtained money from their customers under the pretext of VAT, Withholding Tax and NCAA levy.

"That TBA has no cause to pay tax as it has provided 54 hire and reward flight services to Total E&P Nigeria Limited from May 2009 to June 2010 generating over N730 million from the contract. It also provided five air transportation services to the Akwa Ibom State Government amounting to over N12 million as revenue from transactions."

At press time, the EFCC said it would soon prosecute 25 directors/officials of some of the airlines and NCAA officials.

A top source of the EFCC added: "We have met several times with the affected officials of the airlines. They even made written commitments to pay, but they have refused to do so. In fact, we have a case of one of the airlines that we actually established N5 billion tax evasion against.

"The same airline went back to reconcile its records and admitted in a letter to the EFCC that it owed over N1billion but it has been bidding time on payment."We will soon prefer charges against the affected directors and officials of the airlines and NCAA. As soon as the trial is close by, we will release the list of those for trial. We have concluded our investigations."

On the fate of some of the airlines that have not been operating, the EFCC source said: "Their liabilities will be part of their winding process and their officials or directors might still be arraigned for trial.

"By evading tax, they have violated Section 22 of VAT Act and non-remittance of tax contrary to Section 31 of VAT Act.

"They are also chargeable to court based on Section 14(a) of the Money Laundering Act predicated on the original, illicit/illegal act of conversion of VAT. We are also legally empowered to invoke Section 18 of the Money Laundering Act to make directors of the airlines liable.

"We will charge some officials of the airlines and NCAA for stealing and conversion contrary to Section 383(1), 2 (2) (e) and Section 387(f) of the Criminal Code Act and punishable under Section 390.

"Some of the airlines have also obtained money by false pretence contrary to Section 419, 425 of the Criminal Code Act and punishable under Section 1(1) and (3) of the Advance Fee Fraud and Other Fraud Related Act 2006."

The Nation