Osinbajo deplores unprecedented leaks in the tax system
• Says OECD treaty will worsen Nigeria’s revenue losses
• VP will consolidate Buhari’s plans and programs if elected, supporters say
James Emejo and Adedayo Akinwale in Abuja
Vice President Prof Yemi Osinbajo said yesterday that Nigeria was facing unprecedented leaks in tax administration.
He said the situation had threatened fiscal stability at all levels of government, adding that revenue leakages were not unrelated to corruption in the tax system.
The Vice President spoke at the opening of the 24th Annual Tax Conference of the Chartered Institute of Taxation of Nigeria (CITN), on the theme “Global Disruption and Digitalisation: Implications for Socio-Economic Development”.
Osinbajo also warned that signing the Organization for Economic Co-operation and Development (OECD) corporate tax treaty would “further exacerbate the problem of leakages in our tax system.”
In October 2021, Nigeria rejected the tax agreement signed by 136 countries, to apply a corporate tax rate of at least 15%.
Countries agreed to the pact, fearing multinational corporations would divert profits to low-tax jurisdictions to lower their bills. The measures were also part of efforts to tap into the emerging digital economy.
However, justifying the country’s decision not to approve the deal, Osinbajo said it would aggravate leaks in the tax administration.
Represented at the conference by the Executive Chairman of the Federal Inland Revenue Service (FIRS), Mr. Muhammad Nami, the Vice President said that the terms set out in the agreement would further deprive the country of needed revenue.
Still, there were growing fears among experts that the country would benefit more from signing the deal.
But the VP, while addressing the gathering of tax experts, clarified that “we didn’t sign not because we wanted to do it our way but one, you have a requirement that you can tax any digital player or any multinational company on a global scale, this company must have an annual turnover of 20 billion dollars. This was the first concern.
“The second concern is the averaging mechanism. That $20 billion in revenue is not just for the fiscal year, but a three-year average. So this company needs to earn $20 billion for three consecutive years or it would never pay in any country it operates in except the home country.
Continuing, he said, “Another key thing that caught our attention is that 20% of that $20 billion has to be generated in a country like Nigeria, whatever that company does in Nigeria, we don’t. we can subject it to any tax in Nigeria.
“We must not forget our tax law. The minimum turnover you need as a business in Nigeria to be able to register with the FIRS and pay tax in Nigeria today is only 25 million naira.
“And for someone who earns less than 10% of $20 billion, which I believe is about $2 billion in Nigeria, and that person will not pay tax in Nigeria.
“I think the injustice is unimaginable, it’s wrong and we will stand firm and say we won’t accept it, and that’s why we rejected the signing of the agreement.”
Osinbajo said, “If a company operating in Enugu only generated 25 million naira ($60,000), it would open an office in Nigeria, pay utilities, employ staff and still pay taxes in Nigeria; but someone who generates maybe $1 billion should walk away with the gross income without paying tax to this country, we believe that should not be done.
“Nigeria is the only country we have and we shouldn’t be sensational in discussing these issues, we shouldn’t be emotional about it but let’s stay patriotic because if we sign this then you can name all the multinationals operating in the country, as their overall turnover will not reach 10% of what they earn in the country, they will stop paying taxes in this country.
“That’s why we didn’t sign and we’re not arrogant about it, we’re not trying not to change the way the world is going, but the right thing has to be done.”
Nevertheless, Osinbajo pointed out that the persistent problems of insecurity and crime, inadequate social economic infrastructure among others, could only be solved if there were adequate revenues in the hands of the government through taxation and compliance. effective.
He instructed the CITN and Nigerians in general to ensure compliance with the prevailing tax rules and to “encourage others to comply and report those who do not comply.”
He said the CITN remains an essential part of the country’s tax ecosystem, stressing that taxation is a key driver for social harmony, political stability and economic development and growth.
The vice president said that until the current administration took steps to diversify the economy, previous administrations relied almost exclusively on crude oil revenues.
He said: “However, we have learned from recent market trends that crude oil, like other commodities, is not a sustainable source of national revenue.
“That’s because, as you know, the world has witnessed an unusual modulation in crude oil prices since 2015 when this administration began.
And in the long term, it would be part of a global shift towards green energy that would further weaken demand for crude oil. In all of this, one message emerges: if we are to make progress as a nation, all of us; compatriots should give up an adequate share of their resources in the interest of national development, social harmony, political stability and economic growth.
Osinbajo said tax professionals must be aware of the costly impact of non-compliance by the taxpayers they hold on government revenues, adding that society as a whole remains crucial and must be given the most high priority in tax administration.
Meanwhile, National Chairman, Osinbajo Consolidation Organisation, Mr. Oyeniran Oyebamidele said that the Vice President would consolidate all the projects and programs established or initiated by the current administration if elected President next year.
The group disclosed this yesterday, in a statement released by its National Publicity Secretary, Rev. Godwin Arome.
The group described the vice president as a development icon, who marked the political history of the country by being resourceful, energetic, politically suave and the epitome of democracy.
The statement quoted Oyebamidele as saying that the country would notice the ongoing effort made by the Buhari administration to lay a solid foundation for the transformation of the country through the establishment of development infrastructure, industrialization, social investment and economic directions, the benefits of which he said have yet to be realized, due to global issues that have created devastating effects on many fronts of development initiatives across the world.
He expressed satisfaction with the Vice President’s performance, saying he had shown remarkable tact and maturity in supporting the administration of President Muhammadu Buhari as a worthy MP, whose loyalty and the quality of credible leadership were not questioned; with unwavering focus.
Furthermore, the chairman of the committee, Mr. Jibrin Yusuf, who is also a member of the group’s board of directors, said that most of the members are grassroots politicians and will work to ensure the success of raising people who would carry the message of presidential aspiration. d’Osinbajo in the nooks and crannies of the country and among APC delegates, who would decide the party’s presidential standard bearer at the National Convention for the presidential primary.
For his part, the organization’s national secretary and chief strategist, Dr. Yakubu Ugwolawo, stressed the need for everyone to be on deck to work vigorously and harmoniously for Osinbajo’s emergence as a bearer. party flag.