The Federal Inland Revenue Service has stated that Nigeria’s cautious approach to the endorsement of the Organisation for Economic Cooperation and Development/G20 Inclusive Framework 2 pillar solution to the taxation of the digital economy is in the best interest of the country.
This was disclosed by FIRS Chief Muhammad Nami on Monday in a press statement.
He stated that the agreement is unfair to Nigeria and developing countries in general, saying that the FG reviewed the conditions of the contract and had concerns over the impact that the signing of the agreement would have on Nigeria’s tax system and revenue generation.
What the FIRS boss is saying
- Nami said, “There are severe concerns for how the riles would compound the issues in our tax system. For instance, to be able to tax any digital sale or any multinational enterprise, that company must have an annual global turnover of 20 billion euros and global profitability of 10%.
- “That is a concern; this is because most Multinationals operating in Nigeria do not meet such criteria, and we would not be able to tax them.
- “Secondly, the 20 billion Euro turnover in question is not just for one accounting year, but it is that the enterprise must make 20 billion euros revenue and 10% profitability for four consecutive years. Otherwise that enterprise will never pay tax in our country, but in the country where the enterprise comes from, or it’s country of residence.”
- He added that this is an unfair position, especially to domestic companies, which with a minimum of above N24 million (5700 Euros) are subject to companies income tax in Nigeria,
- “This rule will take off so many Multinationals from the scope of those that are currently paying taxes to Nigeria; in other words, even the Multinationals that are currently paying taxes in Nigeria would cease to pay taxes to us because of this rule,” he said.
- The FIRS chief praised members of the Nigerian public who had raised concerns on various occasion over Nigeria’s decision not to endorse the two pillar solution, stating that their concerns came from a place of genuine passion and patriotism.
Bloomberg recently reported that a top tax official at the Organization for Economic Cooperation and Development signalled his uncertainty over whether national governments will keep to the agreed timetable for implementing a historic global tax agreement. Yet, he warned there was no going back on the deal if officials wanted to avoid a further breakdown of international tax rules.