Adeosun: FG to Sign Convention on Treaties to End Tax Evasion

The Minister of Finance, Mrs. Kemi Adeosun has said that the federal government will soon sign a multilateral convention on the implementation of tax treaties that would stem tax evasion by multinationals operating in the country and illicit funds flows.

The minister made the disclosure at the end of yesterday’s Federal Executive Council (FEC) meeting, stating that council had approved a memorandum presented by her ministry to proceed to sign a multilateral convention on the implementation of tax treaties.

The minister who said the move was to prevent base erosion and profit shifting which she said had not been profitable to Nigeria, especially in view of the administration’s commitment to the task of revenue generation and revenue mobilisation.

Adeosun explained that the treaties, to which Nigeria is a signatory, would stop major companies that evade tax through base erosion and profit shifting.

In view of the existing treaties, she further explained that profit made, for instance, in Nigeria, through accounting means, would be shifted to countries, which imposed little or no tax.

According to her, the arrangement implies that a country where profits were generated will not be paid taxes, while the profit made in that country would be declared in countries that provide tax

havens.

She further explained that the presentation of the memo was spurred by a new pact among the G20 couantries to end the tax treaties, which she said had been unprofitable to Nigeria.

“There is a pact among G20 countries to end this. Nigeria was part of those that negotiated this convention and today, council gave us permission to go and sign that convention.

“What that convention will mean is that where we have existing bilateral tax treaties, as Nigeria already has some tax treaties with some countries which certainly are not in our favour, they will be reviewed.

“I gave an example to council that we signed a treaty with some countries and they said their national carrier will not pay taxes in Nigeria and in exchange, Nigeria’s national carrier will not pay taxes in their country but as you know, Nigeria doesn’t have a national carrier. So that kind of arrangement is adverse for Nigeria.

“This convention will give us the right to go and amend that treaty and opt out of some of the things we had already signed in previous administrations and were not appropriate for Nigeria.

“This convention allows us to renegotiate. So the benefits are that the convention will simply modify existing bilateral tax treaties, to implement tax treaties related to matters in a cost efficient manner instead of individual negotiations and amendments to the treaty.

“It will be incorporated into existing tax treaties, provisions that will prevent the grant of tax treaty benefits in appropriate circumstances and will address tax treaty abuse, promote tax transparency and drastically curtail illicit financial flows and ultimately, will increase revenues of government,” she said.

In his own briefing, the Minister of Transport, Mr. Rotimi Amaechi, said his ministry secured approval for the completion of the Baro River port after the council “deliberated on the major contracts that will assist us in its completion”.

He said within the next four to six months, the Baro River port would have been completed while the Ministry of Works “will look at the issue of road that leads to Baro River port, while on our side, we’ll look at the revival of the narrow gauge sril line that leads to Baro River port”.

The Minister of Power, Works and Housing, Mr. Babatunde Fashola, said the council approved two memoranda presented by his ministry.

According to him, the first memorandum was approved for the reimbursement of funds to be spent by Kwara State government for the construction of a road between Oyo and Kwara States.

Explaining that the road serves the agricultural belt between Oyo and Kwara States, Fashola said Kwara had applied to be allowed to construct the road with the understanding that the funds to be expended on the project would be refunded on a short-term basis in future. The project, he added, would cost N7.943 billion.

He also said the council approved a memorandum for the completion of 240MW of emergency power through 830MW turbines to be provided this year by General Electric (GE) at the cost of $186.6 million.

“The other one is consistent with infrastructure development in the country and memo for Afam emergency power, which is part of the ministry’s roadmap for incremental power to the grid.

“You might recall that I paid a visit to the Afam site last week. Some of your correspondents were there.

“So council has ratified the earlier approval given to GE to undertake that project so that it can complete 240MW of emergency power through 830MW turbines this year.

“Council also approved the contract for the construction and rehabilitation of the sub-stations to enable the evacuation of power once the turbines are installed and again, all of these are consistent with Economic Recovery and Growth Plan (ERGP) to prioritise infrastructure in the transport and energy sectors.

“The road contract is N7.94 billion. The total package for the Afam power plant is $186.6 million, while the contract for the sub-station is $2.207 million for the components that are offshore – these are equipment to be manufactured outside Nigeria – and N133.184 million for the local components,” he stated.