Nigeria to refund GE $2m unlawful tax deductions

Nigeria’s Federal Inland Revenue Service is set to commence the process of refunding at least $2m to General Electric, a multinational company operating in the country.

The money is said to be an excess withholding tax deducted from Arco Petrochemicals Engineering Company through its business dealings with GE International Operations.

The decision was reached during negotiations between FIRS officials, GE, Arco and the Trade Union Services Department of the Federal Ministry of Labour and Employment in Abuja.

GE, an American company, had engaged Arco, a Nigerian oil servicing company, for the supply of local personnel.

But in its letter dated June 5, 2018, Arco claimed that GE deducted 10 per cent as withholding tax for the contract between 2006 and 2015, against the five per cent stipulated by the Nigerian law.

The company said the applicable tax rate should be five per cent in line with the FIRS Circular No. 2006/02 of February 2006.

Following the controversial tax remittance disputes between GE and Arco Group, 60 per cent of the workers’entitlement was not paid from 2009.

An official of the ministry, who pleaded anonymity, said that although the Federal Government was not a debt collector, “it came into the matter because Arco accepted its financial obligation for the settlement of salaries and union dues.

“We gave them three weeks to begin the process of refund for those monies that they agreed were actually over-payment to FIRS. If there is no contention on that, within one week, GE should initiate the process of refund.

“FIRS said they have to go through some processes before they can get cash to pay. For those that are contentious, let them try to get their books together and reach an agreement within two weeks.

“The unions involved said they have the list of what is due to their members that have not been paid by Arco. We expect that those reconciliations will be completed and payment made.”

The Chairman of the Petroleum and Natural Gas Senior Staff Association of Nigeria, Arco branch, Mr Amadike Ikechukwu, said that Arco paid field workers full entitlement while other categories of staff got just 40 per cent at the termination of their appointments.

He added that Arco claimed that it could not complete the payment because the American company deducted 10 per cent withholding tax from workers’ earnings and paid FIRS millions of dollars.

“As union leaders, we agree with the commitment made by FIRS and GE. We are optimistic that the remaining 60 per cent will be paid to the workers,” he said.

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