DAPPMAN Expresses Worry Over FG's New Tax Structure

The Federal Government's planned additional 0.5% tax on the gross turnover of petroleum marketing enterprises has drawn criticism from the Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN).

At the first Platforms Africa Continental Forum in Lagos, Olufemi Adewole, the Executive Secretary of DAPPMAN, stated that the tax will drive many businesses out of business.

If the government applied the new tax system, according to Adewole, there are signs that a fuel distribution crisis could soon strike the nation.

He was adamant that if taxes were imposed on fuel marketing companies in Nigeria, more than half of them would shut down.

He claims that the smooth distribution of petroleum products across the nation is threatened by the impending business closures.

“The petroleum marketing firms’ trading margin is too small that they cannot pay such an amount sustainably.

“Petroleum marketers operate a very low margin but the turnover is very huge. Unfortunately, the margin does not correspond with the turnover,” said Adewole.

He continued by saying that their profit margins remained the same at N160 per litre and N200 per litre as opposed to when fuel was sold for N40 per litre.

“The Finance Act 2020 says the marketers have to pay 0.5 per cent of their gross turnover by the end of this year.

“It is unimaginable that probably half of the petroleum marketing firms existing now may go under if the new tax regime is implemented.

“Except the regulator which is Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) approves a new margin for the marketers.”

In order to improve the supply and distribution of Premium Motor Spirit (PMS) across the country over the holiday season, he said the organisation had urged the government to grant petroleum marketers access to foreign exchange at the official Central Bank of Nigeria (CBN) rate.

According to DAPPMAN, the importing and distribution of fuel is difficult for members due to a lack of foreign exchange (forex), a number of unauthorised taxes, and poor roads.

The importation, distribution, and prices of petroleum products throughout the nation are currently threatened by the acute shortage of foreign currency on the official market, which has a significant impact on prices.