Nigeria Still in Global Tax Deal – Zainab

Zainab Ahmed, minister of Finance, Budget and National Planning, has said the country has not opted out of the global tax deal.

The  global tax deal is negotiated under the Organisation of Economic Cooperation and Development (OEDC)/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS).

Speaking at the sideline of the hybrid 2022 spring meetings of the International Monetary Fund and the World Bank in Washington DC, United States, she said: “We have raised some issues that we are not comfortable with, therefore have not been able to sign up with other countries. We feel that somewhere along the line, they will recognize the limitations we have seen, and also make some necessary adjustments.”

Speaking on the concerns raised by ministers of finance at the meeting, the Minister said the Ukraine war has an impact on the global economy especially with food security challenges.

“In the case of Nigeria, it is also affecting us in terms of input for our fertilizer production and the biggest one is the high prices of energy. Nigeria produces fertilizer and now exports it but one of the major inputs for it is potash but it is threatened by the war. So, while the inputs are being received, the cost is high so it is driving up the price,” Ahmed noted.

She however said the federal government under the Presidential fertilizer initiative may raise support to the fertilizer blending plants to help subsidize the prices.

For context, BEPS refers to corporate tax planning strategies used by multinationals to shift profits from higher tax jurisdictions to lower tax jurisdictions or no-tax locations where there is little or no economic activity, thereby eroding the tax base of the higher-tax jurisdictions using deductible payments such as interest or royalties.

The OECD estimates that countries lose $100-$240 billion worth of revenue annually to BEPS practices, which is the equivalent to 4-10 per cent of the global corporate income tax revenue.

The deal set out to introduce a global minimum tax rate and new profit reallocation rules, which aim to give countries a fairer chance to collect tax revenues from multinational enterprises (MNEs) operating in or generating revenues from their jurisdictions.