ActionAid Nigeria Backs Federal Government Over Reluctance To Sign New OECD Tax Deal.

Uploaded by on July 17, 2021

ActionAid Nigeria wants Nigeria and other developing nations to stay away from ratifying the deal offered by the Organization for Economic Cooperation and Development OECD, for taxation of the Digital Economy.

In a statement by the Communications Coordinator, Mrs Nihinlola Akande, the organization is displeased that the negotiation calling for all countries to remove their unilateral measures to tax the digital economy, such as digital services taxes, will only be beneficial to rich countries.

It notes that it is fundamentally unfair to ask countries in the global south to trade-off their unilateral taxation of the digital economy, in lieu of implementing a deal they were not part of negotiating, coupled with the fact that they will only marginally benefit from it.

According to ActionAid Nigeria,’ the fact that this new deal will take effect earliest in 2023 and cannot be reviewed until earliest 2030 is not good enough. Revenues are desperately needed in the global south to tackle the challenges posed by the covid19 pandemic and to fight poverty and inequality. Companies operating within the digital economy need to be compelled to pay their fair share of taxes.

As part of its recommendations, ActionAid Nigeria agrees with the concerns expressed by the African Tax Administration Forum (ATAF) which immediately after the publication of the new deal, stated that ‘political pressure should not be brought on countries to apply these rules.’

The body states that it recognizes and welcomes progressive moves by Nigeria to put in place unilateral measures to tax the digital economy through the Finance Act of 2019 and Significant Economic Presence Rule of 2020, calling on the federal government to maintain these measures until an acceptable and beneficial deal is met.

It adds that Nigeria should also restrain from signing Tax Treaties indiscriminately as they may have same effects as the deal.

The ActionAid Nigeria states further that while the new deal is disappointing, it underlines the need for more comprehensive reforms of the international tax practices and treaties. Such reforms are expected to give countries in the global south equal voices in the process of negotiating international tax rules through for example, a possible United Nations Tax Body, as this will also give increased rights to countries in the global south to effectively tax digital companies operating within their jurisdictions.

It submits that the current OECD Tax deal is neither beneficial to the country as a tax rate or Foreign Direct Investment, FDI attractor. The worst concern about it is that it can only be reviewed in the next seven years.

By Abiola PETERS.

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