E-Financial
Why Nigeria Backed out OECD Tax Accord – FIRS
Nigeria has declined to endorse the Organization for Economic Cooperation and Development (OECD) Minimum Corporate Tax Agreement, according to the Federal Inland Revenue Service (FIRS), since it does not suit the country’s overall interests.
Mohammad Nami, executive chairman of FIRS, made this explanation at the Chartered Institute of Taxation of Nigeria’s recent tax conference (CITN).
Nami was responding to a comment made by Mr Aigboje Aig-Imoukhuede in his opening paper at the conference, in which he questioned the wisdom of Nigeria, along with three other countries, Kenya, Pakistan, and Sri Lanka, refusing to sign the OECD’s global minimum tax deal in response to the digital 4th industrial revolution.
In his welcome address, Adesina Adedayo, president. CITN, expressed concerns about Nigeria’s refusal to sign the 15-point Organisation for Economic Co-operation and Development Base Erosion and Profit Shifting (OECD-BEPS) Action Plan, particularly action plans 5, 6,13, and 14, which he claimed formed the implementation of the OECD-BEPS Project 4 minimum requirements.
Nigeria’s use of reciprocal jurisdiction, he said, has its own consequences in terms of disrupting the global tax system.
However, Nami stated in his response that Nigeria’s cautious approach to the adoption of the (OECD)/ G20 Inclusive Framework two-pillar solution to the taxation of the digital economy is in the country’s best interests and will ensure that Nigeria does not miss out on potential revenue from the digital economy.
Nami explained why the agreement is unfair to Nigeria and developing nations in general by stating that the country was concerned about the impact that signing the agreement would have on the country’s tax structure and tax revenue creation after reviewing the terms of the agreement.
“There are grave concerns about how the rules would exacerbate the problems in our tax system.” To tax any digital transaction or multinational enterprise (MNE), for example, the company or enterprise must have an annual global turnover of €20 billion and a global profitability of 10%. That is a cause for concern. Because the majority of MNEs operating in our country do not fit these standards, we would be unable to tax them.
“Secondly, the €20 billion global annual turnover in question does not apply to a single accounting year; rather, the enterprise must generate €20 billion in revenue and maintain a 10% profit margin on average for four consecutive years; otherwise, the enterprise will never pay tax in our country, but in the country from which it originated, or its country of residence,” he added.
Finally, he pointed out that for Nigeria to apply the law, a global corporation must have generated at least €1 million in revenue from Nigeria within a year.
Nami believes that this is an unjust situation, particularly for domestic businesses that have a minimum revenue of N25 million (about €57,000) and are subject to Nigerian corporate income tax.
He went on to say that this rule will exempt a large number of multinational corporations from paying taxes in Nigeria.
In other words, even multinational corporations that currently pay taxes in Nigeria would stop paying taxes to us as a result of this rule.
Fourth, the FIRS Executive Chairman indicated that under the terms of the Two-Pillar Solution, in the case of a dispute between Nigeria and a Multinational Enterprise, Nigeria would be subjected to an international arbitration panel rather than Nigeria’s domestic court system.
“Even when the money is directly tied to a Nigerian member of an MNE group, which is typically liable to tax in Nigeria on its worldwide income and subject to Nigerian laws, it would be subject to international arbitration rather than Nigeria’s court system and laws.” We are concerned about receiving a fair bargain as a result of this procedure.
“More importantly, a dispute resolution process involving a Multinational Enterprise before an international arbitration tribunal outside the country would result in high legal fees, travel expenditures, and other incidental costs.” Nigeria will spend more, even if the tax revenue from such cases was not enough,” he stated.
On the possibility of Nigeria losing significant revenue if it does not sign the OECD Inclusive Framework rules for the taxation of the digital economy, the FIRS Executive Chairman stated that this was not a concern because the country had already proposed four solutions to the problem of digital economy taxation.
The exchange rate stabilised in the FX market as the Central Bank of Nigeria (CBN), defended the local currency with $360 million, stemming a negative tide from increased demand for the US dollar.
Olayemi Cardoso, Governor, Central Bank of Nigeria
According to Market Forces Africa, for most part of the week, the naira experienced heightened volatility due to an FX liquidity shortage in the official window, brought forward from the previous week.
This caused the exchange rate to wobble against the US dollar, but late picked up as inflows into the market improved.
On Friday, the naira rebounded against the dominant foreign currency, the US dollar, in last-minute transactions supported by a relatively higher liquidity supply by the monetary authority.
The exchange rate appreciated by about 2% to settle at N1,517.93 in the official market on Friday after persistent negative volatile.
Spot FX data from the regulator showed that the naira gained N29.89 on the day following FX sales to banks.
The market liquidity was also supported by additional inflows from foreign sources and reduced demand for foreign payments.
FX interventions and inflows from offshore clients and local corporations boosted volume of US dollar in the official window, AIICO Capital Limited dropped the hint in an investors note.
In the market, demand pressure persisted, leading to fluctuations in the US dollar to naira exchange rate for most of the week.
The CBN sold $188.10 million to banks, the last auction offered at the range of N1,532.00 to N1,540.00, bringing the total FX sales for the week to $360.00 million, according to investment banking firm TrustBanc Financial Group Limited.
Despite these interventions, demand outpaced supply, causing the naira to depreciate. By the end of the week, the market recorded improved liquidity, with trades ranging between N1,480 and N1,548.
Data from the CBN revealed that Nigeria’s external reserves increased by USD12.06 million to USD38.36 billion after 9 consecutive weeks of decline. In the forwards market, the naira rates decreased by 0.6% for a one-month contract to N1, 577.80.
The Securities and Exchange Commission (SEC) has cancelled the registration of Mainland Trust Limited, and suspended Centurion Registrars, following their failure to comply with regulatory directives.
The commission made the disclosure through circulars which were released at the weekend. The circular on Mainland Trust Limited read: “The Securities and Exchange Commission hereby notifies the general public that the registration of Mainland Trust Limited as a capital market operator has been cancelled with immediate effect.
“This cancellation order is made pursuant to the powers of the Commission under Section 38(4) of the Investments and Securities Act, 2007 and Rule 34(1)(e) of the SEC Consolidated Rules and Regulations 2013.
“The Commission’s decision is informed by the company’s failure to comply with regulatory directives and non-resolution of several complaints against it.
“All clients of Mainland Trust Limited are by this notice advised to contact the Central Securities Clearing Systems Plc (CSCS) for appropriate guidance on the transfer of their stocks to another stockbroker of their choice.”
SEC directed that the Nigerian Exchange Group (NGX), the Institute of Capital Market Registrars (ICMR), the Chartered Institute of Stockbrokers (CIS), the Central Securities Clearing System (CSCS) Plc and all capital market trade associations to discontinue capital market-related dealings with the company.
In the same vein, the SEC announced the suspension of Centurion Registrars Limited, its directors and sponsored individuals from capital market activities with immediate effect.
The SEC said the suspension order was made pursuant to the powers of the Commission under Section 38(4) & (5) of the Investments and Securities Act, 2007 and Rule 34(1)(e) of the SEC Consolidated Rules and Regulations 2013.
It explained that its decision was informed by the company’s failure to comply with regulatory directives and non-resolution of several complaints against it.
“All clients of Centurion Registrars Limited are advised to contact Africa Prudential Plc for appropriate guidance on the transfer of their portfolios to another Registrar of their choice.
“In addition, the Nigerian Exchange Group (NGX), the Institute of Capital Market Registrars (ICMR), the Chartered Institute of Stockbrokers (CIS), the Central Securities Clearing System (CSCS) Plc and all Capital Market Trade Association are directed to discontinue capital market related dealings with the company and its principal officers,” the circular stated.
The commission also disclosed that in furtherance of the commission’s unwavering commitment to the maintenance of zero tolerance for infractions in the Nigerian capital market and in line with its revised enforcement strategies, stakeholders and the general public are hereby informed that henceforth, the names of capital market operators (CMOs) found to have violated market laws/regulations would be published in the commission’s “name and shame” journal.
“The publication would be in addition to the sanctions/penalties for the respective infractions prescribed in the ISA 2007 and the SEC Rules and Regulations.
“This enforcement strategy underscores the Commission’s dedication to safeguarding the integrity and stability of the Nigerian capital market, protecting investors, and ensuring strict adherence to established rules and regulations.
“Stakeholders and CMOs are advised to be guided accordingly” the commission added.
FirstBank has formally denied allegations of fraud in an ongoing court case filed by customer Dr. Agbai Eke, describing the claims as “entirely unfounded and false.”
According to a statement from the bank, their internal investigation points to “unprofessional and unethical dealings” between Dr. Eke and a former bank employee.
FirstBank claims these individuals used a personal relationship to conduct unauthorised transactions without the bank’s knowledge or involvement.
The bank said it has reported the matter to law enforcement authorities for further investigation.
Officials noted that suspects have already provided statements to investigators.
FirstBank also declined to provide additional details, citing the ongoing court proceedings.
“We will refrain from further comments to allow the Court to dispassionately determine the issues before it,” the bank stated.
The case gained public attention following reports by Thisday Newspaper and Arise Television, as well as through a circulating video regarding the legal dispute.
Senate Votes to Compel Facebook, Others to Open Offices in Nigeria
Google to Buy Cybersecurity Company Wiz for $32Bn
MTN Group to Invest $10Bn in African Expansion by 2030
ATCON Calls for Telecom Policy Improvements in Nigeria
9mobile Reinforces Innovation Leadership with Echoes, Its Trailblazing AI Storytelling Platform
KongaFM Basks in Rave Reviews from Nigerians
MTN Group Fintech Announces Payment Alliance with Network in Africa
DSS Threatens to Sue AIT, Channels TV over Reports on ‘Invasion’ of Lagos Assembly
Toriola, MTN Nigeria CEO again Defends Tariff Hikes amidst Backlash
Apple Introduces Affordable iPhone 16e Model
General News2 days agoJumia Nigeria Kicks Off Tech Week 2025
Telecom2 days agoBridging Nigeria’s Digital Divide: ITU and UK-FCDO Fuel Rural Connectivity Revolution
E-Financial2 days agoSEC Voids Mainland Trust’s Registration, Suspends Centurion Registrars
E-Business2 days agoNITDA Expands iHATCH Initiative to Drive Job Creation, Economic Diversification
Telecom2 days agoTransforming Lives Through Advocacy: Princess Omoyemwen Inspires Change at MTN’s Go MAD Activation in Benin
Telecom1 day agoMTN’s Earnings Hammered by Free Falling Naira in Nigeria
E-Business1 day agoFG Partners Cyberpedia to Fight Misinformation with AI
E-Financial1 day agoCentral Bank Defends Naira with $360m in 5-Day