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Nigeria decries unfair international tax rules

The Nigerian Government has called for the abolishment of unfair international tax rules skewed against developing countries. The Minister of Finance, Budget and National Planning,…

The Nigerian Government has called for the abolishment of unfair international tax rules skewed against developing countries.

The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed made the call on Monday in Abuja at the 42nd Technical Conference of the Commonwealth Association of Tax Administrators (CATA). The 4-day conference has the theme “Tax Administration in the Digital Era.”

“The current international tax rules are skewed against source countries; particularly, developing countries,” the minister stated.

She explained that the skewness in the current international tax rules is again influencing the two-pillar solution of the Inclusive Framework. “We have observed, for instance, that ‘Amount A’ profit meant for market jurisdictions is progressively being chipped away in favour of jurisdictions where the multinationals are resident. Another example of skewness of the ‘Amount A’ rules is the requirement for jurisdictions to surrender domestic tax disputes to a mandatory and binding ruling of an arbitration panel composed and sitting outside the legal system of the respective jurisdictions,” she stated further.

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Ahmed posited that “taxation is a matter of domestic law; disputes arising from the interpretation of domestic legislation should only be resolved within those domestic legislations and by people properly schooled to interpret them.”

Thus, she said, “The discussion to change the rules must start now; the world must rework the profit allocation rules used for transfer pricing and the sharing of taxing rights by tax treaty partners. Nigeria is of the view that CATA is that organisation that is best placed to start this dialogue.”

Also speaking at the conference, the President of CATA and the Chairman, Federal Inland Revenue Service (FIRS), Mr Muhammad Nami, said from 2023, there will be definite efforts to get more informal sector players into the tax net.

He said at the sidelines of the conference that the FIRS is “trying to summit a regulation to the Minister of Finance on Presumptive Tax”.

Nami noted, “We already have a tax law that allows us to bring the informal sector into the tax net. But it is on condition that regulation has to be issued by the Minister of Finance, Budget and National Planning.

“We are doing that, and we will submit a draft regulation to the Minister. Thus by 2023, we should come up with a framework of which we will use technology, our administrative apparatus and other means to bring them into the tax net.”

At the CATA level, he said the harmonisation of tax systems is on the front burner of the fiscal conversations in many jurisdictions. It is a reform that must happen for the governments to plug leakages and shore up revenue.

He noted that some jurisdictions have achieved this, and they testify to its advantage over the fragmented system and others need to learn how, why and what jurisdictions that have harmonised their tax systems have to share.