Nigeria Rejects Deal As U.S., UK, 134 Other Countries Approve Historic Minimum Corporate Tax Rate

Nigerian flag (file photo).

The deal follows concern that multinational companies are re-routing their profits through low tax jurisdictions to cut their bills.

Nigeria has declined to join an international agreement that has several other countries of the world sign up to a historic deal to ensure big companies pay a fairer share of tax.

Some 136 countries of the world agreed to enforce a corporate tax rate of at least 15 per cent, as well a fairer system of taxing profits where they are earned.

The decision follows concern that multinational companies are re-routing their profits through low tax jurisdictions to cut their bills.

The Organisation for Economic Cooperation and Development (OECD), an intergovernmental organisation, had led talks on a minimum rate for a decade, saying that the deal could bring in an extra $150bn (£108bn) of tax a year, bolstering economies as they recover from Covid.

The move is expected to hit digital giants like Amazon and Facebook, as well as firms with global sales above 20 billion euros and profit margins above 10 per cent.

A quarter of any profits they make above the 10 per cent threshold will be reallocated to the countries where they were earned and taxed there.

But critics have said that a 15 epr cent rate is too low, and firms will get around the rules.

Earlier in July, more than 100 countries supported the initial OECD proposals when they were made public.Countries that initially resisted, including Ireland, Hungary and Estonia, are now on board.

However, Nigeria, Kenya, Pakistan and Sri Lanka have not yet joined the agreement.

In July, PREMIUM TIMES reported how ActionAid Nigeria commended the Nigerian government's reluctance to sign onto the Organisation for Economic Co-operation and Development, (OEDC) tax deal.

The statement said it was in support of the reluctance of Nigeria to sign onto the OECD global tax reform deal as it considered the new plan unhelpful to Nigeria.

"The gains may be to maximize tax collection or maximize FDI inflow. However, the current global minimum tax of 15 percent is a threat to both gains," the organisation said.

"Nigeria set up rules and regulations with the corporate tax at 30 percent for big and multinational companies. The average Corporate Tax Rate for African countries is 28 percent. However, the 15 percent minimum corporate rate is too low and therefore inadequate to stop the 'race to the bottom.

"The benefits of a proposed minimum tax will be far below what is expected to fund the budget deficit in Nigeria, which will translate to the country's inability to meet up with the fight against poverty and unemployment.

"For a moderate stand, Nigeria, like most other African countries will need the global minimum tax rate to stand between 25 percent to 30 percent above the 21 percent as initially proposed by the United States."

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