Tax Bills: TUC Warns Against NRS Royalty Collection Role In Oil, Gas Sector

The Trade Union Congress of Nigeria (TUC) has expressed concerns over certain provisions in the proposed Tax Reform Bills, warning that some changes could negatively impact the nation’s economy.

TUC president, Comrade Festus Osifo, made the congress’s position known in a statement yesterday, stating that assigning the collection of royalties in the oil and gas industry to the Nigeria Revenue Service (NRS), a function currently handled by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) could undermine investors’ confidence in the sector.

While the TUC welcomed the federal government’s decision to maintain the VAT rate at 7.5% and ensure continued funding for TETFUND and NASENI, the labour leader called for the need to address unresolved concerns, particularly the proposed shift in royalty collection responsibilities.

The labour centre warned that transferring the role of royalty collection from NUPRC to NRS could result in significant revenue losses due to the technical nature of the task.

Osifo further explained that royalty determination and reconciliation require specialised expertise in oil and gas operations, which he noted that NRS currently lacks.

The TUC also advocated increasing the tax exemption threshold from N800,000 per annum to N2.5 million to relieve low-income earners.

The congress argued that this would help alleviate the economic hardships faced by many Nigerians and enhance their disposable income.

Osifo commended the inclusion of a derivation component in VAT distribution among the three tiers of government and described it as a move that could stimulate productivity at the sub-national level and reduce Nigeria’s dependence on rent-seeking economic models.

He said, “The proposed bill assigning royalty collection to NRS appears beneficial on the surface but would most likely result in significant revenue losses for the government.

It could also create regulatory burdens, increase compliance costs for industry players, and reduce investor confidence due to overlapping functions and inefficiencies between NUPRC and NRS”.

“While we deeply appreciate the federal government’s efforts to listen and adjust to our advocacy, we still advocate that the above concerns be considered and adopted in the Tax Reform Bill, they will be highly beneficial to the government and Nigerian populace.

“The Trade Union Congress of Nigeria has a shared responsibility to promote policies that improve the lives of Nigerians, including workers. We believe that proactive measures when implemented, benefit citizens to the maximum extent and are evidence of great and sincere leadership,” the statement reads.