28 January 2016, Sweetcrude, Abuja — In the light of the huge amount Nigeria is being fleeced by oil companies under the guise of tax breaks, ActionAid has emphasized the need for oil and gas companies as well as other multinational companies to open their finances for scrutiny, through the publication of their financial and declaring their top and bottom line figures.
ActionAid, in a presentation in Abuja,00 stated that the companies should report their profits, sales, assets, number of employees and tax payments to governments in each country where they operate, including taxes not paid due to tax breaks.
Ms. Ojobo Atuluku, Country Director of ActionAid Nigeria disclosed that there are incontrovertible evidences from researches that corporate organizations operating in developing countries especially, as declaring soaring profits, while corporate investments in these countries had more than tripled since the 1980s.
She said, “Yet, the corporate tax revenues of the countries where these profits are generated have flat-lined as a percentage of their Gross Domestic Product, GDP. As a result of this, women and children are suffering as healthcare, schools and other key public services are starved of resources.
“If many of these tax incentives are prevented, we will be able to improve the lives of women and children with improved availability of health, education and other key public services.”
Atuluku lamented that developing countries are losing a minimum of $138 billion annually to tax breaks, with Nigeria losing an estimated $2.9 billion or N577 billion annually as a result of tax incentives.
She faulted the assumption that granting tax relief to multinationals and large corporations would promote investments that attract capital and contribute to job creation, stating that instead, multinational developmental financial institutions are now warning countries against excessive tax incentives.
She stated that, “The Organisation for Economic Development (OECD) has cautioned that ineffective tax incentives may erode resources for the more important drivers of investment decisions. Such business enhancing factors such as good infrastructure, security, a stable energy supply and not least a healthy and well-educated workforce which investors attach great value to are invariably absent in many developing countries due to revenue lost to excessive tax incentives.
“Tax revenue is a prerequisite for the existence of these public goods, and businesses may make higher profits if they contribute their fair share of taxes and get public goods in return.”
Continuing, she said, “We in ActionAid and our partners on the Tax Justice platfor, hereby want Nigeria and other resource rich developing countries to begin to review their tax incentive policies. We call on Nigeria national assembly in particular, not only to review existing laws on tax incentives but to exercise caution in the proposed amendment to the Companies Income Tax Act 2004.
“The proposed amendment aims to provide additional tax incentives for gas utilization, mining sectors and businesses located in areas with inadequate infrastructure. It suggests increasing the length of specific sectors’ tax holidays, and offering 10-year tax holidays to companies established where no infrastructure, that is, electricity, water, or tarred road, is provided by the government.
“As a consequence of this new bill, more foreign companies would be allowed to benefit from large tax breaks as the three oil companies in this case study —Shell, Total and Eni — did.”