04 August 2016, Sweetcrude, Abuja – In a drastic move to shore up already low revenues, the Federal Executive Council, FEC, on Wednesday approved a multinational competence authority agreement which would give the government a better grip of its tax laws to prevent tax evasion and avoidance by companies operating in the country.
The Minster of Information, Alhaji Lai Mohammed who disclosed this during a briefing with journalists at the end of the monthly FEC deliberations on Wednesday, alongside two of his colleagues, the Minister of Power, Works and Housing, Mr. Babatunde Fashola and the Minister of Transport Mr. Rotimi Amaechi, said the agreement would ensure that multinationals besides filing returns in Nigeria would also file returns on their activities in other countries where they run businesses, for accuracy of figures.
Nigeria has suffered severe low revenues especially since 2014 due to falling oil prices and activities of militants in the Niger Delta, even as the Buhari’s administration is struggling to fund the over N6 trillion expansionary 2016 budget.
The budget and planning ministry disclosed last week that the country lost over N1 trillion revenues target for the first half of the year.
According to Mohammed, “The whole essence is to give the government a better grip on its tax laws and also to prevent tax evasions and avoidance by multinational companies. Where multinational companies operate in more than one country, it is quiet easy for them to move profit from one territory to another territory where the tax laws are very favourable to them and what has happened over the years is that the revenue companies have lost a lot of money.
“As at the last count over N1trillion has been lost over a period of time and the revenue companies have found that they were losing more money in terms of tax evasion and avoidance than what they were even receiving as grants from multinational agencies.”
He added that, “This is a law that provides that if a company like MTN or Nestle, for instance, is operating in Nigeria, not only must they file returns on his activities in Nigeria, he must also file returns on his activities in every other country that they are doing business so that you can see from there whether there is any attempt to hide figures.
“Apart from shoring up our finances,I think its is part of the fight against corruption and it also enhances transparency.”
Fashola corroborated Mohammed’s stand stating that the agreement is consistent with the macroeconomic policy of the government to fund its operation and economy with more tax income as the prices of commodities especially oil become more threatened.
He explained that “It would allow the government to see really how many taxable revenues it has access to especially from companies and all of that. It is for transparency and accountability on the private side of the economy because transparency and accountability have focused perhaps a little more on the public side of our national life.”
He added that “When you look at the throughput that is coming from the energy of the private sector beaming the ray of transparency and accountability on revenues that should come into the public space and be used for national development only helps to strength the economy in the long run and bring probity across the board.”
The FEC also approved an outline business case for the development of greenfield port facilities at Badagry in Lagos State as a first step towards approving the establishment of a new sea port in Badagry which is expected to draw in at least $2.558billion into the government coffers.
Fashola, who noted that the Badagry port was long overdue as work started way back in 2012, said Nigeria’s ports were lagging behind in terms of technology in the maritime industry as bigger vessels are now being built across the world that requires larger depths and drafts berth.
“Now some of our competitors on the continent like Djibouti are building bigger ports, so if we don’t build this port we risk becoming uncompetitive and we risk a threat to our maritime hub status in the sense that we may become a transhipment port instead of a port of original destination,” he said.
The minister stressed that all of the financing for the project is coming from the private sector, adding that this is “consistent with what this government stands for in terms of allowing private capital and competency to come into the development of our infrastructure. It was delayed because of the refusal of the last administration to grant approval for it because port development was under federal government control.”
Amaechi, who also expounded on the project said it should take about five years to construct and it is expected to draw a total of $2.558billion into the government coffers. He restated that both the federal government and Lagos state government would not contribute financially other than the land given by the Lagos state government.