The Nigerian government has given approval for the ratification of a multi-lateral convention to implement tax-related treaties.
The approval was given at Wednesday’s Federal Executive Council meeting presided over by the Acting President, Professor Yemi Osinbajo, at the Council Chambers of the Presidential Villa, Abuja.
Minister of Finance, Kemi Adeosun, who briefed State House correspondents on the outcome of the meeting, said multinational companies operating in Nigeria engaged in the practice of evading taxes in Nigeria.
“One of the means by which major companies to evade tax is a practice called base erosion and profit shifting, which means profit made in Nigeria using accounting means, to shift it to a country that has little or no tax,” Adeosun said, explaining that the practice deprives Nigeria of revenue.
She said Nigeria was part of the negotiations among G-20 nations and the Organisation for Economic Development and Co-operation, OECD, to end the practice.
The approval given by the Nigerian cabinet for the ratification of the conventions means that the country would re-negotiate some unfavourable existing bilateral treaties on tax.
“For example, we signed a tax treaty with a particular country, which says their national carrier would not pay tax in Nigeria and in exchange Nigeria’s national carrier would not pay tax in their country, but as you know, Nigeria has no national carrier,” Adeosun stated, pointing out that such a treaty was adverse to the country since it has no national carrier.
She said the approval for the ratification of the convention would give Nigeria the right to amend such treaties and opt out of “some of the things that we have already in previous governments that are not appropriate for Nigeria.”
Adeosun listed the benefits of the convention to include swift modification of “existing bilateral tax treaties to implement tax treaty related matters in a cost efficient manner instead of individual negotiation and amendment of the treaties.”
The convention, according to her, would also incorporate into existing treaties, provisions that would prevent the granting of tax treaty benefits in inappropriate circumstances.
“It will address tax treaty abuse, promote tax transparency and drastically curtail illicit financial flows and ultimately it would increase tax revenue of government,” she said.
Afam Power Station
Minister of Power, Works and Housing, Babatunde Fashola, said the Federal Executive Council also approved the total sum of $186.6million for the completion of the Afam Power Project in South-east Nigeria.
According to him, the contract for the substation is $2.207million for the components that are offshore while the local components would cost $133. 184million.
Fashola said the council ratified the earlier approval given for General Electric to undertake the project to complete 240 megawatts of emergency power through 830 megawatts turbines this year.
He said the substation would enable the evacuation of power when the turbines are installed.
The Power and Works Minister said approval was also given for N7.943billion for the reimbursement of the Kwara State government to undertake the Karama-Kishi Road, which is a major link between the agricultural belt of Oyo and Kwara states.
Minister of Transportation, Rotimi Amaechi, said council gave approval for the completion of the Baro River Port in Niger State, North Central Nigeria.
Amaechi said the project would be completed in the next six months.