The Federal Inland Revenue Service (FIRS) called for improved synergy among countries and international stakeholders to explore alternative rules that will enable market jurisdictions, particularly African countries, to effectively subject digital businesses to tax.
The Executive Chairman of the FIRS, Muhammad Nami made this remark during his presentation at a Technical Assistance Programme powered by the African Tax Administrators’ Forum (ATAF) in Lome, Togo.
With the theme: “Member’s Needs and How to Broaden the Collaboration”, Nami noted that some African countries had endorsed the Organisation for Economic Co-operation and Development (OECD) Inclusive Framework’s global solution to the tax challenges of the digitised economy.
“Nigeria continues to maintain its position that the outcome will not be favourable to African countries.”
According to the EC, Nigeria continues to hold the view that the outcome would produce very minimal revenue comfort for African countries.
This, he highlighted, is instructive considering the implementation challenges that developing jurisdictions will face due to the complexity of the Pillar 1 and 2 rules.
“Our analysis continues to show that the possible cost of administering and implementing the complex rules will far outweigh the expected revenue accruing from its implementation.
“I, therefore, urge the African Tax Administrators Forum to join the discussion at the UN Tax Committee of Experts, South Centre, as well as collaborate with all other well-meaning stakeholders to explore alternative rules that will enable African countries to effectively subject the digital businesses and base eroding payments to the tax in our jurisdictions.”
He emphasised that the collaborations should extend to other rules developed. It should be implemented at the international level for the taxation of Multinational Enterprises – the tax treaty, exchange of information and transfer pricing rules.
Nami further called for the African Tax Administrators Forum to collaborate with the United Nations Development Programme (UNDP) to explore opportunities for Africa within the programme’s Tax for Sustainable Development Goals Initiative, to ensure that African countries are able to generate appreciable revenue to fund the SDGs.
Speaking on West African regions that require Technical Assistance from ATAF, the EC noted that there was a need for capacity building of members with respect to Base Erosion and Profit Shifting Actions by Multinational Corporations, and on the taxation of the digital economy.
“It is crucial for the ATAF Technical Assistance to look towards improving the capacity of member country’s tax administration, through the digitisation of operations.
“Also, critically needed by tax authorities in the West African region is the development of Data Analytics intelligence expertise and the use of research tools that are required for taxation in a modern economy,” he highlighted.
Nami further charged the African Tax Administrators Forum to organise peer-to-peer knowledge sharing sessions between beneficiaries of the Technical Assistance programmes.
This is as he encouraged intensification of their technical assistance on international tax rules, particularly in the areas of tax treaties, transfer pricing, and exchange of information.
The African Tax Administrators Forum Technical Assistance (ATAF-TA) Programme aims at helping members build sustainable and efficient tax systems while achieving its strategic plans to increase domestic resource mobilisation, target the development of African expertise and support Africa’s effective voice in the international tax environment.