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British Airways ‘admits’ to tax evasion in Nigeria – may face legal action
British Airways has admitted to withholding a statutory payment to Nigeria, marking a turning point in the face-off between the government of Nigeria and the foreign airline which began weeks ago over discriminatory fare charged on the lucrative London-Lagos route.
Appearing before the Senate Committee on Aviation that organized an investigative public hearing on the violation of aviation laws by foreign airlines, BA Country Manager Kola Olayinka admitted to the carrier’s tax evasion saying: “It is not only BA; no airline, as we speak, is remitting the 5 percent charged on air fares to the Nigeria Civil Aviation Authority (NCAA).”
British Airways admitted it had failed to remit the 5 percent passenger fuel surcharge (PFS) on tickets to NCAA as required by global aviation practices.
Though the British carrier tried to assure the Senate Committee of its preparedness to begin to pay the tax, provided the legal requirements were clearly spelt out, the Senate Committee on Aviation has threatened to recommend its prosecution for tax evasion.
‘Criminal act’
The General Manager of Air France-KLM Nigeria, Mr Christian Herpi, had told the same committee that payment of PFS had been a practice by airlines worldwide and was not peculiar to airlines flying from Nigeria.
Faulting British Airways record of dodging tax in Nigeria, Senator Hope Uzodinma, the committee chairman said tax evasion is a criminal act and must be prosecuted accordingly.
Mr Uzodinma said: “Refusal to remit taxes is not a civil matter, it is a criminal offence which should be investigated by the appropriate department and we may have to do so.”
He further faulted Mr Olayinka’s argument that not only BA was evading payments.
“That others are not paying doesn’t make it right. The problem is that the NCAA continues to treat this matter as civil. Refusal to pay revenue to government is a criminal matter and we must treat it as such. We will invite the relevant department to investigate the matter for possible prosecution,” he said.
Enjoys relief
The committee chairman maintained that British Airways action was unfair given the fact that the airline enjoys tax relief due to the Bilateral Air Services Agreement (BASA) between Nigeria and Britain.
He argued that since British Airways, Virgin Atlantic and other foreign airlines operating in Nigeria cannot dream of evading tax in their own countries, they must not only pay those taxes in Nigeria, they should be prosecuted.
Other members of the Senate Committee told British Airways that PFS is revenue accruing to foreign airlines and that since it usually appeared in account books as a major revenue source, it is taxable.
The Senators insisted that the refusal to pay the PFS amounted to felony, tax evasion and financial crime.
The tax evasion charge appears to be the latest in the air commerce war between Nigeria and Britain.
Ultimatum
Last month Nigeria’s Aviation minister Stella Oduah issued a 30-day ultimatum to British Airways and Virgin Atlantic to review downwards their air fares on Lagos-London route or face a ban.
The minister had threatened to shut out British airlines from Nigeria’s aviation market over what she considered as unfair levies imposed on Nigerian travellers.
Nigeria’s authorities argued that British Airways and Virgin Atlantic charged far more for flights on Lagos-London route than they charged on neighboring London-Accra route of almost equal distances.
Before the fare war, Nigeria and Britain have had differences late last year over airport landing slots, in which Nigeria’s Arik Air recently ended its daily flights between Abuja and London due to allegations by Arik that authorities at London’s Heathrow International Airport were denying the airline arrival and departure slots at its facilities.
While British Airways and Virgin share 21 return flights a week from UK to Nigeria according to an their BASA agreement, Nigerian airlines are also allowed 21 flights; however Arik Air, Nigeria’s only carrier, has had its landing slots at Heathrow recently cut.
Threatened retalitation
Nigeria’s Aviation minister had promised British carriers to retaliate but diplomacy has seen the matter taken off the Aviation Ministry to the Foreign and Justice Ministries.
Cashing in on popular opinion, the Nigerian Senate appears with its public hearing to have wrested the matter from the Justice and Foreign Ministries.
On the huge fare disparities, Mr Olayinka told the Committee that the price differences were a matter of demand and supply as it affected only first-class and business-class passengers.
He recommended that more frequencies be allocated to foreign airlines flying the contentious routes.
Shooting down British Airways argument, the consultant for NCAA, Mr Babatunde Irukera, said more frequencies would not address the problem which he said was created by the fact that only BA and Virgin Atlantic operate direct flights to and from London.
He said 90 percent of the travellers from Lagos to London go by BA and Virgin Atlantic, adding that passengers flying Air France and KLM to London are those who could not fly British Airways because of the cost but must endure the long hours of stopovers.
Source: Africa Review