Shipping companies trading to Nigeria need to be aware of an important developing situation.  A significant number of ship owners have received demands from the Nigerian Federal Inland Revenue Service (“FIRS”) for payment of back-dated taxes relating to business conducted in Nigeria from 2010 to 2019. The situation is apparently quite serious, with Tradewinds reporting that one ship owner has been asked to pay $18m in tax dating back to 2011. 

Our understanding is that the demands are based on previously unenforced Nigerian legislation from 2004, but the new Nigerian administration is now taking a different approach and is insisting on enforcement.  The manner in which the demands have been issued has been somewhat haphazard, for example, emails sent to generic inboxes which could easily be overlooked.  All ship owners who have traded to Nigeria since 2010 are therefore strongly advised to carefully check whether they have received such a demand, and to remain alert to the possibility of receiving one. 

From our experience of dealing with problems in that region it does seem that owners trading their vessels to Nigeria with potential tax liabilities still outstanding may risk having their vessels detained, potentially for significant periods of time.  We understand that the FIRS will treat non-payment as tax evasion and a criminal offence, such that the consequences could be very serious, not least for the Masters and crews of any vessels that become innocently embroiled in this situation upon calling at Nigeria in the coming months.  No doubt there will also be disputes between owners and their charterers as to whether the taxes can be passed on under the terms of the charterparties. 

For further information please contact Allen Marks or Neil Jackson. 

Allen Marks                                                Neil Jackson
Director                                                      Managing Associate                                  
Allen@cjclaw.com                                     Neilj@cjclaw.com