Zainab Ahmed, the Minister of Finance, Budget and National Planning, will be leading Nigeria’s delegation to the 2019 annual meetings of the International Monetary Fund (IMF) and World Bank.
The meeting is a week-long event that would attract global players across the public and private sectors on subject matters like the economy, finance, trade and environment. It is scheduled to begin today, October 14th through 20th.
The Details: The Finance Minister is expected to be part of a panel of discussion organized by the Financial Transparency Coalition, ICRIT, Oxfam, G-24 and the Friedrich Ebert Stiftung. The panel is titled: “Corporate Taxation in a Global Economy: Can a Consensus for Reforms Emerge?”
She would be accompanied by top government functionaries, including the Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, leading public and public sector players, especially chief executive officers of banks, among others.
Key issues: One of the numerous challenges of multilateralism is taxation. To this end, a consensus for global tax reform is emerging, and is much needed, as international corporate tax rules are under unprecedented stress.
The reason can be blamed on the Base Erosion and Profit Shifting (BEPS) Action Plan adopted four years ago by the G20 which did not curtail various countries from undercutting each other with unilateral measures to protect their tax base.
Also, the BEPS did not address the challenges of the digital economy, failed to simplify rules for tax administrations, did not address the race to the bottom in tax rates and ignored the long-standing demand of developing countries to revisit taxing rights.
End-result: The meeting is expected to reach a new global agreement that will be essential in reducing the multi-trillion-dollar financing gap to achieve the Sustainable Development Goals (SDGs), fight inequality, uphold human rights and improve human development outcomes. Multilateral institutions such as the IMF, OECD, G20 and the United Nations (UN) acknowledge the need for change. Success will require more effective and inclusive cooperation than in the past.
The event will also highlight the importance of tackling corporate tax avoidance and tax competition, take stock of the current international reform process and debate reform proposals.
What you should know: Minister of Finance, Budget and National Planning, Zainab Ahmed lamented Nigeria’s poor collection rate of VAT, saying it was 0.2%, lower than the African average of 0.33%.
Zainab Ahmed said poor collection rates, the need to meet capital expenditure and raise funds to finance the new wage requirement were reasons behind the proposal to raise VAT from 5% to 7.5%.
Similarly, the Federal Inland Revenue Service (FIRS) has announced that effective from January 2020, it would begin to impose VAT on online transactions, both domestic and international.
The commencement date of the VAT charges on online transactions, according to Fowler, would be subject to the government’s approval.