The Minister of Finance, Kemi Adeosun has said that the Federal Government was focused on improving revenue generation and mobilisation through tax collection.
Kemi Adeosun briefing journalists, after the weekly federal executive council (FEC) meeting, said that she presented a memo that was approved by the FEC to sign a multilateral convention for the implementation of tax treaty related matters.
She said, “I presented a memo which was approved by council today and permission was granted to sign a multilateral convention to implement tax treaty related matters to prevent base erosion and profit shifting.
“In simple language, this administration is very focused on revenue generation and mobilisation and part of that work is to improve our tax collection. One of the means by which major companies evade is a
practice called base erosion and profit shifting which means that the profit that was made in Nigeria using accounting methods shift it to a country that has little or no tax.
“So really the country in which profit was generated doesn’t get tax, they go and declare those profits in a country that has very low tax. There is a contact among the G20 countries and the OECD to end this and Nigeria was part of those who negotiated this convention and today council gave us permission to go and sign the conventions.
“What that convention would mean is that where we have existing bilateral tax treaties, like Nigeria already has some tax treaties with certain countries which actually are not in our favour and I gave
example to council.
“For example we sign a treaty with a particular country that says their national carrier will not pay tax in Nigeria and in exchange Nigeria’s national carrier will not pay tax in their country but as you know Nigeria does not have a national carrier, so that type of arrangement is adverse for Nigeria.
“This convention will give us the right to go and amend that treaty and opt out of some of the treaties that we have already signed in previous administration, that are not appropriate for Nigeria. The convention allows us to renegotiate.
“The benefits are the convention will swiftly modify existing bilateral tax treaties to implement tax treaty related matters in a cost efficient manner instead of individual negotiation and amendment of the treaty. It will incorporate into existing tax treaties provisions that will prevent the granting of tax treaty benefit in an appropriate circumstance.
“It will address tax treaty abuse, promote transparency and drastically curtail illicit financial flows and ultimately it will increase the tax revenue of the government.