The Country-Director, Actionaid Nigeria, Mrs Ojobo Atuluku, has called on the Federal Government to reconsider its position in signing tax treaties, deemed unfavorable, with the hope of improving trade and investment for Nigeria.
Atuluku said this at a two-day workshop on “Tax Treaties and Implication for Nigeria” on Monday in Abuja.
She said that the treaties might look good in theory, but in practice, they rarely favoured Nigeria, but ended up promoting many tax avoidance practices thereby undermining development.
She said most tax treaties, by limiting the taxing right of Nigeria on dividend, interest and royalty, potentially reduceed the tax base of the country which would impact negatively on the revenue generation for the country.
“Tax treaties need to be demystified. Nigeria needs to stop giving away its rights with the hope of getting more in return.
“Instead of negotiating these harmful tax agreements, Nigeria should work with other countries and organisations to make sure that Nigeria addresses tax loopholes in the system,” she said.
Also, Advocacy and Campaign Manager, Actionaid Nigeria, Mr Tunde Aremu, said that the government should consider reviewing current tax treaties to determine if the country was actually benefiting from such.
“Special attention should be placed on tax treaties with Kuwait, Mauritius, Belgium, China, Spain and the United Kingdom as these have been found to restrict Nigeria’s rights more than the norm.
“Treaty negotiation, ratification and impact assessments should be subject to far greater public scrutiny.
“Take a pro-development approach to the negotiation of tax treaties by adopting the UN model tax treaty as the minimum standard,” he said.
He spoke about the pending treaty with Mauritius, still at the National Assembly, saying that it should not be allowed to be passed because it had no real benefit to Nigerians.
He said the treaty was exploitative and that would rather benefit the many shell companies headquartered in Mauritius.
Similarly, Miss Lovisa Moller, from Actionaid UK, giving a wider perspective, said that 1,500 tax treaties were signed between developed and developing countries.
She said that more than 350 involved a sub-Saharan African country and was rapidly increasing.