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T1 Marine Services Ltd., the oil services company chaired by Nigerian tycoon Tunde Folawiyo, is fighting tax demands of ₦1.65 billion ($1.2 million) from the Nigeria Revenue Service in a dispute now in its eighth year.
The company is asking the Tax Appeal Tribunal in Lagos to quash 12 notices of demand covering its 2014, 2015 and 2016 financial years, according to court filings reported by The Africa Report. The case last came up for hearing on Nov. 3.
The demands total ₦1,651,614,383. They include ₦893.5 million ($654,600) in companies income tax, ₦445.5 million ($326,400) in value-added tax, ₦263.6 million ($193,100) in withholding tax and ₦48.9 million ($35,800) in tertiary education tax. The tax authority is also seeking interest and penalties on the value-added and withholding tax it says is owed.
Vessel hire at the center
The core of the dispute is the revenue service's decision to disallow ₦2.88 billion ($2.1 million) in expenses that T1 Marine says it incurred to earn its income.
The biggest item is the cost of chartering vessels. T1 Marine, registered in 2012, provides marine support to oil and gas companies in Nigeria but does not own ships. It leased them from a lessor in the Netherlands.
"The expenses for hiring vessels are a critical expense component for TMSL, no vessel, no work," the company said in its filings. It said tax auditors had accepted the same costs as deductible in earlier years.
T1 Marine is also contesting the rejection of school fees it paid for the children of expatriate staff, which it says were part of their pay, and of ₦48.8 million and ₦43.8 million that crewing company Anchorsafe Ltd. paid on its behalf in 2014 and 2015 to supply seafarers. It says the agency wrongly charged value-added tax on transactions in a free trade zone that are exempt.
Tax agency stands firm
In a reply filed in February 2023, the revenue service said its assessments were correct. It said they followed a reconciliation meeting, ordered by the tribunal, at which it reviewed the company's documents and bank statements.
The agency disputed that T1 Marine had incurred the vessel-hire costs it claimed. It said the company had not produced employment contracts showing it was obliged to pay the school fees, and that its ledger showed no reimbursements to Anchorsafe. It asked the tribunal to declare the company liable for the full amounts.
The Folawiyo group
Folawiyo heads the Yinka Folawiyo Group, the Lagos conglomerate founded by his late father, Wahab Folawiyo, with interests in oil and gas, shipping, agriculture and real estate. He also chairs Coronation Merchant Bank.
The case is one of several tax disputes between Nigeria's revenue service and businesses controlled by the country's wealthiest people, including oil companies tied to TY Danjuma and Wale Tinubu.
Figures were converted at ₦1,365 to the dollar.
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