FIRS Creates New Unit to Check Illicit Financial Flows, Tax Evasion by Multinationals
- ECOWAS recommends more internal tax mobilisation for W’African countries
Ndubuisi Francis in Abuja
In a bid to combat tax evasion and illicit financial flows out of the country by multinationals and other companies operating in Nigeria, the Federal Inland Revenue Service (FIRS) has created a new department to focus on transfer pricing.
In an interview with journalists on the sidelines of the fifth annual tax conference of the West African Union of Tax Institutes (WAUTI) in Abuja tuesday, the Executive Chairman of FIRS, Mr. Babatunde Fowler, confirmed the reality of illicit financial flows by multinationals and tax evasion by companies operating in Nigeria.
The conference’s theme dwelt on the ‘Relevance of Base Erosion and Shifting (BEPS) to the Illicit Flow of Funds from Africa.’
According to Global Financial Integrity, a total of $530 billion is estimated to have been siphoned from the African region by multinationals bent on engaging in illicit flow of funds, including tax
evasion and other illegal activities between 2003 and 2012.
In response to a question on what FIRS was doing to check illicit financial flows and tax evasion by multinationals and other companies in Nigeria, Fowler said a new department had been created on transfer pricing.
“Within FIRS, we have a new department that focuses on transfer pricing, we have invited some specialists to come and train our staff. They have been quite successful. I can tell you in the last one year, we have been able to find out a few companies that are trying to engage in tax avoidance but we have made them pay the outstanding taxes.
Asked if the culprits were Nigerian-owned companies, he said: ‘Unfortunately, multinationals. This happens mainly with multinational where they have more than one corporate organisations in different countries.”
In her address at the conference, the President of the ECOWAS Commission, Marcel Alain De Souza, said the harmonisation of tax legislations of ECOWAS’ member states was a necessity for the attainment of the objectives of the ECOWAS Treaty as well as the realisation of the common market.
As part of regional integration process, he stated that ECOWAS had made significant strides in the area of regional trade, notable among which are the ECOWAS Trade Liberalisation Scheme (ETLS), which allows goods manufactured in ECOWAS member states to be imported into another member state without the payment of the usual customs import duties.
He also said the Common External Tariff (CET), which is being implemented since January 2015 requires all member states to apply uniform customs duties, import quotas, preferences or other non-tariff barriers to trade applicable to all goods entering the territory of the group.
According to Souza who was represented by Miss Rosemond Danso Asante, in addition to these reforms, with the advent of trade facilitation and partnership agreements in the region, these measures will no doubt adversely affect the customs duties on international trade.
He said to fill this gap, West African governments had no choice but to mobilise more revenue through domestic taxes to compensate for the potential revenue shortfall.
“In anticipation of the dwindling revenue, ECOWAS has developed a fiscal transition programme, which has comprehensive reform strategies to support and strengthen the capacities of tax administrations in the member states to mobilise domestic revenue.
“With the influx of multinational companies into West Africa venturing into different sectors of our economies, and often with aggressive tax schemes, it behoves on us to sharpen our skills to protect the new base,” he said.
Souza expressed the preparedness of ECOWAS to work closely with all recognised regional bodies championing fiscal issues.
