Tankers shun Nigeria due to backdated tax demands

Tankers shun Nigeria due to backdated tax demands | BDM Blog | BDM Law

Recent developments in Nigeria have led the government to issue backdated tax demands on many tanker owners. These taxes appear to relate to an old tax law under which, in certain circumstances, tax was payable on oil exports. It seems however that the law was not enforced for a number of years. It’s only now that the Nigerian Federal Inland Revenue has decided to address this issue. The demands for payment of back taxes from dozens of owners who have called at Nigerian ports has sent the tanker markets into turmoil with affected owners reluctant to send vessels to Nigeria for fear of arrest. The main route affected seems to be the TD20 route where spot rates have spiralled.

Against this background, it’s possible that ships tempted to trade the (now far more lucrative) Nigerian market might be caught up in the back tax issue. There is of course an issue as to who bears the burden of export taxes in the governing CP but the prospect of auditing hundreds of historic CPs and bringing claims against the relevant charterers is hardly an attractive one for ship owners and those who insure them.

At BDM we have dealt with many cases involving tax issues. We are involved in an ongoing case concerning Guinea which has led to a dispute under the relevant charter and an arbitration in London. The legal issues are relatively straightforward but the scale of what may need to be done to resolve historic back taxes is unprecedented.

Nick Burgess - author profile
Nick Burgess
BDM is a specialist shipping law firm offering high quality legal advice and representation at a reasonable price. Please follow us on social media by clicking below.

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