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Why Nigeria Did Not Sign The OECD Minimum Corporate Tax Agreement -FIRS

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We Will Leverage Finance Act To Provide Funding For Budget -FIRS

The Federal Inland Revenue Service (FIRS) has explained why Nigeria did not sign the Organisation for Economic Cooperation and Development (OECD) G20 Inclusive Framework two-pillar solution to tax challenges of the digitalized economy.

The OECD G20 Inclusive Framework two-pillar solution proposes a framework of rules aimed at tackling base erosion and profit shifting, and providing for the taxation of Multinational Enterprises (MNEs). Four member countries of the Inclusive Framework (Nigeria inclusive), out of 140, have not agreed to the Two-Pillar solution.

Nigeria’s reasons for not agreeing to the Two-Pillar solution was explained in a webinar session hosted by the FIRS last week.

The Executive Chairman of the FIRS, represented by the Group Lead, Executive Chairman’s Group, Mr M. L. Abubakar, noted that taxation of the digital economy has become a topical issue that many economies and developmental blocs are working to solve, including the OECD and the United Nations Tax Committee who have commissioned projects to produce a common front for countries to adopt.

“Nigeria has been involved in various work-streams under the OECD project and had articulated its position on the technical work towards the goal of producing a common front for countries. However, our concerns on potential negative revenue returns that the rule designs would have for developing countries were unaddressed, Nigeria abstained from committing to the rules at this time.” He stated.

He explained that the webinar was therefore to educate the general public on the modalities and impact of the statement released by the OECD Inclusive Framework on the 8th of October 2021 and to provide a broad picture on why Nigeria abstained from signing.

The webinar which was a special edition of the FIRS Taxpayer Engagement Series was hosted by Mr. Olufemi Olarinde, Technical Assistant (Tax Policy) to the Executive Chairman FIRS, while technical papers where delivered by Mr. Mathew Gbonjubola, Mr. Temitayo Orebajo, Mr. Kehinde Kajesomo, Mr, Emmanuel Eze and Ms. Aisha Isa, all staff of the FIRS.

Explaining in details, Mr. Mathew Gbonjubola, the Group Lead Special Tax Operations Group, and Nigeria’s representative at the OECD Inclusive Framework highlighted that despite the expected outcome that both Pillars will increase Global Corporate Income Tax by as much as $150 Billion per annum, with attendant favourable environment for investment and economic growth, there were serious concerns that the pillars did not address negative revenue outcome for Nigeria and other developing countries.

“The general issues that developing countries have with the outcome that was published in October 8th is the high cost of implementation. And that speaks to the complexities of the proposal in the inclusive framework statement. In every complex situation or rule, implementation and compliance will always be difficult. When implementation or compliance is difficult, there would be high cost of implementation.

“Another issue was that the economic impact assessment that was carried out on Pillar 1 and 2 were founded on an unreliable premise. The country-specific impact assessment that was done was top-down. Somebody just looked at the GDP of Nigeria, and says Nigeria’s GDP is this much and then they should be able to buy this number of shoes and things like that. And you and I know, in that kind of postulation, the margin of error is usually very wide. That exactly was what happened with this. Particularly for Nigeria, when we ran the numbers it was way off the figures that the OECD gave us.

“And the final issue most developing countries had was that the developed world, within the inclusive framework, was very indifferent to the concerns expressed by most developing countries. This you can see from the outcome, with respect to the complexity, issues of high cost of implementation and on the issue of revenue accruable to developing countries. When you look at the bulk of the money that would accrue from the project, if any, 70% – 80% will go to the developed countries. Almost nothing comes to the developing countries.” He explained.

On the specific concerns raised by Nigeria, Mr. Gbonjubola, who led Nigeria’s team on the Inclusive Framework negotiations, explained that while the whole project started out to find solutions to the challenges of a digitalised economy the outcome was completely different.

He went further to note that the statement by the OECD Inclusive Framework required all parties to remove all Digital Service Taxes and other relevant similar measures with respect to companies taxation and to commit not to introduce such measures in the future.

“The statement required the withdrawal of unilateral measures by countries. Which Nigeria does not have a problem with (Nigeria does not have any unilateral measure targeted at digital services companies). However, the paper that was released on unilateral measures was so expansive in its definition that we are concerned that the taxing rights that Nigeria has always enjoyed may be withdrawn.”

He further explained that Nigeria is unable to implement the mandatory binding resolution on arbitration because of constitutional limitations as to tax dispute resolution.

He also stated that for Nigeria, “Pillar 2 is not a deal breaker because Nigeria could work with Pillar 2. “We have a few issues with Pillar 2 but we could live with them but because Pillar 1 and 2 are a single package, since we are rejecting Pillar 1, we can’t take on Pillar 2”.

“Under the inclusive framework rule you either accept both Pillars or you reject both Pillars. You cannot pick one to the exclusion of the other. And since Nigeria is not able to join one of the pillars, it means we are out of both Pillars.”

Mr. Gbonjubola also stated that Nigeria does not see any additional revenue coming to by way of Pillar 2, though he added that it could act as a behaviour modifier for policy makers to take another look at the various tax incentives and tax waivers we have in our tax laws and begin to restructure them in other to ensure that we are not deliberately throwing away revenue.

“Nigeria could not sign up to the statement of the inclusive framework because it did not address the concerns that we had expressed as a country and it also did not take cognisance of issues around developing countries, which will make those outcomes not to provide additional revenue, and if any, very little, and at very significant cost.”

He further stated that Nigeria, which had participated in all the meetings of the working groups would continue to participate in the design of all technical notes and model rules, and would agree to the Pillars if its expressed concerns are addressed.

“And finally, just like the Honourable Minister of Finance said a couple of months ago, Nigeria would continue to participate in the inclusive framework activities particularly the design of all the technical notes and the model rules, and then, if and only if, the concerns we have expressed are addressed, then Nigeria still has the chance to join up and to sign up. But if not, we will leave that to our policy makers to decide going forward”

The Webinar had in attendance Prof. Abiola Sani, a professor of Commercial Law in Nigeria as well as other eminent tax practitioners and representatives of government and private institutions. The representatives of the Kenya and Zambia revenue authorities were also in attendance.

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5 Things To Know About Late Bukka Hut Co-founder, Laolu Martins

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5 Things To Know About Late Bukka Hut Co-founder, Laolu Martins

Laolu Martins, a co-founder of Bukka Hut, the leading fast-food chain in Nigeria, has reportedly committed suicide.

In a statement cited by Newsrand, the Bukka Hut boss, who served in the financial sector with over 21 years of experience in investment banking, corporate banking, stockbroking, asset management, and pension fund management, passed away on Tuesday, September 27, 2022.

“We hereby solicit the support and understanding of everyone as the family grieves the loss of our beloved Laolu in our privacy.

“Our kind request is that you support the family – wife, children, aged mother and father and his siblings with your prayers at this difficult time.

“Further announcements will be made by the family,” a statement from the deceased’s family, read.

Get familiar with Laolu Martins

  1. Martins started his career with PricewaterhouseCoopers in 1999.
  2. He joined Investment Banking & Trust Company Plc now Stanbic IBTC Bank Plc, where he served in the Financial Control and Trade Finance/Foreign Operations units of the Bank.
  3. Martins was later seconded to Stanbic IBTC Asset Management Ltd where at various times he was Financial Controller, Head Asset Management, and lastly Head Stockbroking.
  4. He later resigned in 2005 to join Shell Nig. CPFA Ltd, the Fund Manager of the Shell Companies in Nigeria Pensions Scheme where he was Head, Investments.
  5. In 2008, he resigned to join Nigeria International Security Limited, NISL, an independent financial services firm specialising in investments within the Nigerian space.

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Buhari Warns Against Use Of Automatic Weapons For State’s Security Outfits

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Buhari Warns Against Use Of Automatic Weapons For State's Security Outfits

President Muhammadu Buhari has issued a warning to state governors over the use of automatic weapons for their security outfits.

Buhari in a statement through his media aide, Garba Shehu explained that only the National Security Adviser can permit the use of sophisticated weapons, which the orders have not been given.

“The Presidency wishes to strongly assert that there is no state, not Katsina, not any other state in the federation, that has been authorized to procure automatic weapons for their security outfits.

READ ALSO: Afenifere Explains Why It’s Backing Peter Obi For President

“Under this administration, the President has repeatedly made it clear that nobody is allowed to illegally carry AK-47 or any other automatic weapons and that they must surrender them.

“Where they fail to do so, the law enforcement agencies have been given clear directives to deal with any such outlaws.

“Under the existing regulations, only the Office of the National Security Adviser can issue such authorization, upon proper clearance by the President and Commander-in-Chief and as it is at this moment, no such approvals have been issued to any state government,” the statement read.

This is coming after security outfits in Katsina were reported to be armed with an automatic weapons, which the Governor, Aminu Bello Masari explained that the administration invited the Provost of the Civil Defence Training College in Katsina to train their vigilantes for a five-day period “in the handling and operations of Pump Action Rifles.”

The Governor said that the state’s security outfits have no intentions to assume the responsibilities of the security agencies of the Federal Government of Nigeria but to render help.

However, Buhari commended states for their help in partnering with law enforcement agencies of the federation, in tackling insecurity in the country.

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Nigeria Loses 700,000 Barrels Of Crude Oil A Day To Vandalism – FG

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Nigeria Loses 700,000 Barrels Of Crude Oil A Day To Vandalism - FG

The Federal Government has lamented the havoc caused by vandals in the Niger Delta, disclosing a loss of 700,000 barrels of crude oil per day.

The Minister of Information and Culture, through his media aide, Segun Adeyemi revealed this in a press release, stating how the country’s revenue is declining as a result

“On the economy, Alhaji Mohammed said the activities of vandals in the Niger Delta are causing the government to lose about 700,000 barrels of crude oil per day, thereby denying the government huge revenue and foreign exchange,” part of the press release read.

READ ALSO: Publish Details Of Your Assets Before Campaign, SERAP Tells Obi, Atiku, Others

The Minister also commended his administration in the area of insecurity, boasting of a decrease in terrorism in the North since the emergence of Muhammadu Buhari as president.

He charged critics to compare the country’s security in 2015 to that of current times, priding on how his administration has made the North East accessible again.

“I am bold to say here that in the last three months, even our worst critics will agree that the government has gotten the handle on security issues. In the area of insecurity, I want to assure you that the worst is over.

“It’s unfortunate that people who comment on insecurity fail to start from where we were in 2015 and where we are today.

“In 2015, the entire North East of the country was a no-go area. The North East is once again accessible because of the government’s efforts,” He stated.

Concluding on the crude oil vandalism, Lai Mohammed revealed a technology deployment to help counter bunkering.

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