Nigeria's campaign against tax evasion, especially by Multinational Companies (MNCs) operating in the country, was taken to the Platform for Collaboration on Tax (PCT) conference in New York, United States, which ended on Sunday.To show the seriousness of the trend, the Minister of Finance, Mrs. Kemi Adeosun, who made the complaint, called for the designation of tax malpractice by the MNCs across developing countries as "foreign corrupt practices."
PCT is an initiative of the Organisation for Economic Cooperation and Development (OECD), World Bank Group, International Monetary Fund (IMF) and the United Nations.Reports have quoted Vice President Yemi Osinbajo and Information and Culture Minister, Lai Mohammed, as estimating the country's loss to multinationals' tax evasion and avoidance at $1trillion over a period of time.
Osinbajo, at the end of the Federal Executive Council (FEC) meeting in June last year, said Nigeria lost about $178 billion to illicit financial flows in the last 10 years. The loss was also a result of tax avoidance by multinationals through tax-related treaties on profit shifting.
Already, the ongoing Voluntary Assets and Income Declaration Scheme (VAIDS) has been projected to generate about $1 billion, being taxes evaded by individuals, corporates and multinationals in the country.
Conservatively, by the amount projected to be generated, given the current official exchange rate of N306 per dollar, Nigeria has been losing no less than N306 billion yearly. This represents 13 per cent of the capital budget proposal of N2.43 trillion in the 2018 national plan and could comfortably execute many development projects in the ministries of education, interior, health and water resources.
The theme of the conference was "Taxation and the Sustainable Development Goals (SDGs)." It focused on the opportunities, challenges for taxation and practical aspects of tax policy and administration, and presented a platform for the minister to discuss Nigeria's tax issues and show how the nation is doubly affected by illicit financial flows due to corruption and tax evasion.
Adeosun specifically requested the OECD, World Bank, IMF and United Nations, among others, to see the tax avoidance actions of the multinational companies as corrupt practices."There is absolute need for a complete understanding of how these MNCs behave in Nigeria and developing countries. Many of them operate a completely different standard in Africa, contrary to what obtains globally," Adeosun said.
She lamented that the defaulting MNCs were hiding behind slow legislative processes to perpetrate wrong activities in the countries from which they derive significant income. Adeosun said the designation of tax evasion as a foreign corrupt practice would facilitate current efforts to sue these companies in their own countries.She disclosed that government was taking a number of measures internally, including taking full advantage of international initiatives, to tackle the problem.
"Internal measures include tightening financial controls and surveillance, adoption of the National Tax Policy with its commitment to regular revisions and the ongoing tax amnesty programme- VAIDS." She commended the United Nations for putting the issue of illicit financial flows on the front burner and said the recipient nations must also take measures to discourage the flows into their countries by asking more questions.The minister urged more countries to adopt such measures as recently initiated by the United Kingdom government tagged "Unexplained Wealth Orders."