FG Seeks Collaborative Efforts in Addressing Skewed Int’l Tax Rules
•Harmonisation of tax systems will plug revenue leakages, says Nami
James Emejo and Kasim Sumaina in Abuja
The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed yesterday called on the Commonwealth Association of Tax Administrators (CATA) to join forces with Nigeria in insisting that the skewed international tax rules be straightened for the good of all.
The minister insisted that the current international tax rules were skewed against some countries, particularly developing nations, including Nigeria.
Speaking at the opening of the 42nd Annual Technical Conference of the Commonwealth Association of Tax Administrators (CATA) with the theme: “Tax Administration in the Digital Era,” in Abuja, the minister stressed that taxation was a matter of domestic law, pointing out that disputes arising from the interpretation of domestic legislation should only be resolved within those domestic legislations and by people properly schooled to interpret them.
Ahmed said Nigeria was committed to working with other jurisdictions and international bodies to achieve a win-win solution in the contentious matter.
She said, “Painfully, the skewness in the current international tax rules is again influencing the two-pillar solution of the Inclusive Framework.
“We have observed, for instance, that “Amount A” profit meant for market jurisdictions is progressively being chipped away in favour of jurisdictions where the multinationals are resident.
“Another example of skewness of the ‘Amount A’, rules are the requirement for jurisdictions to surrender domestic tax disputes to the mandatory and binding ruling of an arbitration panel composed and sitting outside the legal system of the respective jurisdictions.
She said the “discussion to change the rules must start now; the world must rework the profit allocation rules used for transfer pricing and the sharing of taxing rights by tax treaty partners.
“Nigeria is of the view that CATA is that organisation that is best placed to start this dialogue. Nigeria is committed to working with other jurisdictions and international bodies to achieve a win-win solution.
“The ‘Amount A’ proposal being developed by the Inclusive Framework is not achieving consensus because it is founded on win-lose principles. Only rules that promote a win-win situation can achieve the support of all.”
The minister said countries must cast aside their differences or individual self-interest to jointly develop a workable, simple, and fair solution to the challenges confronting taxation.
She identified other problematic areas of taxation including digitalisation of tax administration, fair international tax rules, capacity development, and nomad workers.
She also urged delegates and experts at the conference to use the opportunities presented by the conference to speak frankly on the issues confronting the international tax system and come up with an actionable communique that will help the government in formulating appropriate policies.
Also, in his remarks, the Executive Chairman, Federal Inland Revenue Service (FIRS), Mr. Muhammad Nami, noted that harmonisation of tax systems was on the front burner of the fiscal conversations in many jurisdictions, adding that it is a reform that must happen for the governments to plug leakages and shore up revenue.
He said, “Some jurisdictions have achieved this, and they testify to its advantage over the fragmented system. Others need to learn how, why and what jurisdictions that have harmonised their tax systems have to share.”
He also noted the upsurge of disruptive technological innovations in the business environment in recent times, adding that these have triggered peculiar issues that tax authorities are grappling with.
He said the business world was in a state of flux while the character of data and its management keeps changing as tax administrators remained under compulsion to align their mandates with the changes arising from technological advancements.
Nami, who doubles as the President of CATA, said in matching the pace of advancement in technology, tax administrators must remain bound by the laws, regulations, and codes that safeguard the sourcing, storage, processing, and management of data.
Nami said, “In diverse ways, all members of CATA have to deal with the challenges that transformational technology has brought to the commercial space and stay ahead of the conversation. As revenue authorities with common political history, the questions, then are: How are we faring? What lessons can we learn from each other?”
