Chartered Institute of Taxation of Nigeria (CITN) is working on a policy and strategy document for the taxation of global tech companies in Nigeria.
This is coming as 130 countries recently agreed on a minimum 15 per cent global tax rate on large multinational enterprises.
The pressure to tax global tech companies in Nigeria is coming on the heel of the suspension of the operations of Twitter, social platform.
Elsewhere, Adesina Adedayo, president, Chartered Institute of Taxation of Nigeria, said the institute is working on a strategy document for taxation of global tech companies, among other taxes.
Adedayo spoke during a courtesy visit by a delegation from the institute to the Vice President of Nigeria, Prof. Yemi Osinbajo, in Abuja.
The CITN president gave the Vice-President the communiqué the institute came up with during its 23rd annual tax conference in Kaduna.
While presenting the document, Adedayo said, “Arising from deliberations and a charge from his excellency, the Governor of Kaduna State, Mallam Nasir El-Rufai, CITN is working on a strategy document which would be concluded shortly towards addressing these salient issues: ways and means of taxation of the informal sector; taxation of agriculture at the farm gates; scale-up capturing tax identification records; and how to tax global technology companies.”
He urged the Federal Government to address its low revenue through improved tax collection method.
He said the Nigeria Economic Sustainability Plan as well as the measures implemented was a right response to the challenges posed by COVID-19 pandemic and was largely instrumental to creating buffers for the government at all levels in withstanding the pressures and waves created during the peak period and the aftermath of COVID-19.
Adedayo said, “However, it must be appreciated that our revenue levels are still quite low to create the necessary funds to undertake meaningful development.
“Therefore, it is important that we sustain measures already being implemented to improve tax collection at all levels.”
He said the institute had earlier on in the course of this administration presented the CITN Charter of Tax demands to the Federal Government.
The document provided some cogent recommendations by the CITN for a better tax system in particular and for national economic development.
He said some of the recommendations were already being implemented.
He said some areas that had not received considerable attention for consideration to included “creation of the office of adviser on taxation; national honours for deserving taxmen and taxpayers; address the multiple revenue collection agencies; and resolving the challenge of multiple taxation and tendency to introduce earmarked taxes.”
Others were the review of the incentives regime and abuse of tax waivers; and greater involvement of the institute as a think-thank on fiscal policy initiatives.
Meanwhile, Organisation for Economic Co-operation and Development (OECD) said 130 countries have agreed on a minimum 15 percent global tax rate on large multinational enterprises (MNEs).
MNEs are companies with a global turnover above 20 billion euros and profitability above 10 percent (i.e. profit before tax/revenue).
In a recent statement, the OECD said the agreement by 130 countries represents more than 90 percent of global GDP.
Earlier in June, Group of Seven (G7) countries had backed a global minimum tax of at least 15% as part of a broader push by Joe Biden’s administration to create a “fair and inclusive” international economy.
The new global taxation rate will ensure that large corporations pay a fair share of tax wherever they operate and earn profits to keep such firms from dodging taxes by shifting their profits to countries with low rates.
“Pillar One will ensure a fairer distribution of profits and taxing rights among countries with respect to the largest MNEs, including digital companies,” the international organisation said in a document.
“It would re-allocate some taxing rights over MNEs from their home countries to the markets where they have business activities and earn profits, regardless of whether firms have a physical presence there.
“Pillar Two seeks to put a floor on competition over corporate income tax, through the introduction of a global minimum corporate tax rate that countries can use to protect their tax bases.
“The two-pillar package will provide much-needed support to governments needing to raise necessary revenues to repair their budgets and their balance sheets while investing in essential public services, infrastructure and the measures necessary to help optimise the strength and the quality of the post-COVID recovery.”
Janet Yellen, US treasury secretary, said, “Today is an historic day for economic diplomacy. Lower tax rates have not only failed to attract new businesses, they have also deprived countries of funding for important investments like infrastructure, education, and efforts to combat the pandemic.”
“President Biden has spoken about a “foreign policy for the middle class,” and today’s agreement is what that looks like in practice”.
The implementation plan for the new deal is expected to be finalised in October 2021.
