Business

OECD, Nigeria meet on maximising benefits of two-pillar tax solution

Published

1 year ago

April 14, 2023

NewsDirect

Nigeria has continued to participate in rules development in the interest of the country and Africa.

A delegation from the Organisation for Economic Co-operation and Development (OECD) met with Nigerian representatives on 4th and 5th April 2023, at a workshop it jointly organised with the Federal Inland Revenue Service (FIRS), to discuss the maximisation of the benefits of the Two-Pillar Solution for Nigeria.

This is contained in the Workshop’s Outcome Statement released today. The Outcome Statement was signed by the Executive Chairman of the Federal Inland Revenue Service (FIRS), Muhammad Nami and the OECD Representative, Mr. Ben Dickinson.

The Two-Pillar Solution, a proposal by the OECD Inclusive Framework, is a set of proposed rules, endorsed by 138 countries across the world as a uniform solution to the tax challenges of the digitalised economy, as well as Base Erosion and Profit Shifting.

Nigeria, one of the four members of the Inclusive Framework that did not endorse the set of rules, met with the OECD delegation last week to familiarise relevant government officials with the rules, Nigeria’s position, as well as the potential benefits of the Two-Pillar Solution to the country and the world in general.

The workshop was attended by key stakeholders, led by the Executive Chairman of the FIRS, Mr Muhammad Nami, who was represented by the Coordinating Director, Executive Chairman’s Group, Mr. Muhammad Lawal Abubakar.

Also in attendance were the representatives of the Office of the Vice President, the Federal Ministry of Finance, Budget and National Planning, the Federal Ministry of Justice, Federal Ministry of Industry, Trade and Investment, Nigerian Investment Promotion Commission (NIPC), Nigeria Export Processing Zone Authority (NEPZA), Oil and Gas Free Zone Authority (OGFZA), Nigeria Export Promotion Council (NEPC), Joint Tax Board (JTB), and some States’ tax authorities.

After a critical review of the rules and Nigeria’s participation in their development, stakeholders at the meeting resolved that “there is the need for Nigeria’s continued participation in the rule development, as a member of the Inclusive Framework, to ensure that the interest of the country and Africa is factored into the design and development of the rules.”

The Outcome Statement noted that whether or not Nigeria endorsed the statement of October 2021, and the detailed rules to be released later, to address challenges arising from the digitalisation of the economy, the country’s tax base and fiscal policy options will be impacted by the implementation of the Two-Pillar solution, especially the Pillar 2 Global Minimum Tax Rules of 15 per cent effective tax rate (the GloBE rules).

The meeting consequently observed that there was the need for Nigeria to immediately implement fiscal policy measures to address these potential impacts.

“In light of this, there is a need to commence immediate implementation of fiscal policy measures around the Global Minimum Tax Rules, in view of the fact that other jurisdictions around the world have commenced implementation of measures that will enable them reap top-up taxes allowed under the rules, which will be to the detriment of Nigeria from 2024, if no step is taken.

“There is also an urgent need to review and streamline Nigeria’s tax incentives, as the rules will have the impact of allowing other jurisdictions to mop up taxes not collected in Nigeria due to tax incentives,”the statement read.

The Stakeholders also observed that Nigeria could implement and reap the benefits of Pillar 2, even where it does not wish to implement Pillar 1, noting that “Effective implementation of Pillar 2 rules holds significant potential for increased tax revenue to fund government programme, boost the economy and keep Nigeria as an attractive investment location.”

As part of its recommendations, the OECD-Nigeria Meeting urged stakeholders within the country to commence internal engagements and “draw up a national strategy for immediate streamlining of its tax incentives, to avoid ceding its tax base to other jurisdictions, owing to the implementation of Pillar 2 rules.”

The Workshop Statement enjoined Nigeria to take immediate steps to respond to Pillar 2 through implementation of tax policy options, which may include “changing its income tax rule to bring up its effective tax rate to a minimum of 15 per cent or introducing a Qualified Domestic Minimum Top-up Tax (QDMTT).”

The meeting emphasised on the need for Nigeria to continue to participate in the rule development “as a matter of importance to protect national interest.”

Nigeria is a member of the Inclusive Framework, and has actively participated in the rule development process despite not endorsing the Inclusive Framework October 2021 Statement on the grounds that it was in Nigeria’s best interest not to do so, to ensure that the country does not lose out on potential revenue from the digital economy.

The Executive Chairman of the FIRS had in a statement in May 2022 noted that the country had concerns over the impact the rules could have on Nigeria’s tax system and revenue generation.

“There are serious concerns on how the rules (particularly on Pillar 1) would compound the issues in our tax system. For instance, to be able to tax any digital sale or any multinational enterprise (MNEs), that company or enterprise must have an annual global turnover of €20 billion and a global profitability of 10 per cent. That is a concern. This is because most MNEs that operate in our country do not meet such criteria and we would not be able to tax them,” Mr Nami stated then.

“Secondly, the €20 billion global annual turnover in question is not just for one accounting year, but it is that the enterprise must make €20 billion revenue and 10 per cent profitability in average for four consecutive years, otherwise that enterprise will never pay tax in our country, but in the country where the enterprise comes from, or its country of residence,” the statement read.

Thirdly he noted that for Nigeria to subject a Multinational Enterprise to tax under the rule, the entity must have generated at least €1 million turnover from Nigeria within a year.

Mr. Muhammad Nami stated that this is an unfair position especially to domestic companies which, with a minimum of above N25 million (that is about €57,000) turnover, are subject to companies income tax in Nigeria. He added that this rule will take-off so many Multinational Enterprises from the scope of those that are currently paying taxes to Nigeria. In other words, even the MNEs that are currently paying taxes in Nigeria would cease to pay taxes to us because of this rule.

Fourthly, on the issue of dispute resolutions under the Two-Pillar Solution, the FIRS Executive Chairman explained that the rules were such that in the event of a dispute between Nigeria and a Multinational Enterprise, Nigeria would be subject to an international arbitration panel as against Nigeria’s own justice system.

“It would be subject to international arbitration and not Nigeria’s judicial system and laws—even where the income is directly related to a Nigerian member of an MNE group, which is ordinarily subject to tax in Nigeria on its worldwide income and subject to the laws of Nigeria. We are concerned about getting a fair deal from such process. More so, such a dispute resolution process with a Multinational Enterprise, in an international arbitration panel outside the country, would lead to heavy expenses on legal services, traveling and other incidental costs.

“Nigeria would spend more; even beyond the tax yield from such cases,” the statement had read.

Related Topics:Muhammad Nami OECD tax solution

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Nigerians to pay more as Multichoice Nigeria hikes Dstv, Gotv subscription fees by 25%

Published

16 mins ago

April 25, 2024

NewsDirect

Multichoice Nigeria, a prominent Pay-TV operator, has once again announced a price increase for its DStv and GOtv packages, this time by at least 25 percent.

This marks the third increment since last year, following the initial adjustment implemented on May 1, 2023.

Multichoice stated that the latest increase will take effect from Wednesday, May 1, 2024. While last year’s increment ranged between 19 percent to 20 percent depending on the bouquet, the company is now announcing a 25 percent to 26 percent increase across its packages.

The new subscription fees were communicated to customers via an email titled “Price Adjustment on DStv and GOtv Packages” on Wednesday, April 24, 2024. Below is an excerpt from the email message that subscribers received.

On Wednesday, 1 May 2024 we will adjust our prices across all our packages on OStv and GOtv. We understand the impact this change may have on you – our valued customer, but the rise in the cost of business operations has led us to make this difficult decision.

It remains our mission to provide the best entertainment and viewing experience to you and are committed to continue to deliver high-quality content and unparalleled service.

“So, from Wednesday, 1 May 2024, the price adjustment will take effect as follows.”

According to the notice sent to its subscribers, customers on the DStv Premium package will see their monthly subscription fee increase to N37,000 starting from May 1, marking a 25.4 percent rise from the current N29,500.

Similarly, the price of the Compact+ bouquet has been raised to N25,000 from N19,800 per month, reflecting a 26.2 percent increment.

DStv has also announced that subscribers on its Compact bouquet will now pay N15,700, up from the current N12,500, representing a 25.6 percent increase. Meanwhile, those on the Confam package will face a 25.6% hike as their monthly subscription rises to N9,300 from N7,400.

Under the new pricing structure, viewers on the DStv Yanga bouquet will be charged N5,100 for their monthly subscription, marking a 21.43 percent increase over the current N4,200 fee.

Multichoice has announced price increases across its GOtv packages. Customers on the Supa Plus package will now pay N15,700, marking a 25.6 percent rise from the current price of N12,500. Similarly, the Supa bouquet will see its price increase to N9,600 from the current N7,600.

For the GOtv Max subscription, the new price is N7,200, up from N5,700, while the Jolli package will now cost N4,850, compared to the current price of N3,950. Multichoice has also adjusted the price of its lowest GOtv package, Jinja, which will now be N3,300 monthly instead of the current N2,700.

Although Multichoice Nigeria is yet to issue any statement regarding the factors behind the recent price review, Nigeria’s inflation increased to 33.2 percent.

Business

BPE seeks collaboration with NLC on privatisation process

Published

21 mins ago

April 25, 2024

NewsDirect

By Matthew Dennis

The Bureau of Public Enterprises (BPE), under the leadership of the Acting Director General, Mr. Ignatius Ayewoh, recently paid a courtesy visit to the President of the Nigeria Labour Congress (NLC), Comrade Joe Ajero, to seek collaboration with the Labour Union in the ongoing reform and privatisation program of the Federal Government.

This is contained in a statement signed by Head, Public Communications, Amina Tukur Othman, and made available to NewsDirect on Tuesday.

The statement stated that Mr. Ayewoh emphasised the importance of collaboration with the labour unions to ensure the welfare of workers during and after government agency reforms. He expressed gratitude to Mr. Ajero and the Union for their past support and urged them to continue partnering with the Bureau, particularly as members of the Technical Committee (TC) of the National Council on Privatisation (NCP).

Highlighting BPE’s previous successes in various sectors of the Nigerian economy such as telecoms, banking, Eleme petrochemical, and port terminal concessions, Mr. Ayewoh stated that the Bureau’s current strategy is focused on implementing Public Private Partnership (PPP) and concessioning in its transactions.

Furthermore, Mr. Ayewoh informed Mr. Ajero that BPE is working closely with the Accountant General’s Office to ensure the payment of all outstanding severance liabilities arising from the 2013 privatisation of the power sector, in accordance with agreements made with labour unions.

In response, Mr. Ajero thanked the Ag. DG for the visit and pledged the collaboration of the NLC with the Bureau in its reform activities.

It is worth noting that, in 2023 the BPE, along with other sister agencies, conducted a verification exercise for the payment of the agreed 16-month severance benefits to former staff of the defunct Power Holding Company of Nigeria (PHCN), including certified Next-of-Kin (NOK) of deceased ex-staff. The exercise took place in twelve designated centres over four phases across the country.

Business

Qualcomm announces shortlisted startups for Make in Africa 2024

Published

26 mins ago

April 25, 2024

NewsDirect

Qualcomm has announced the shortlisted startups for Qualcomm Make in Africa 2024, as well as the winner of the 2023 Wireless Reach Social Impact Fund.

The Qualcomm Africa Innovation Platform, now in its second year, aims to work with and support the development of Africa’s emerging technology ecosystem by providing mentorship, education, and training programs with a focus on 5G, Edge-AI/ML, Compute, and IoT. This year, Qualcomm received an overwhelming response, with approximately 250 applications from 30 countries./

As the first initiative of its kind in Africa, Qualcomm Make in Africa is an equity-free mentorship program that identifies promising early-stage startups keen on applying advanced connectivity and processing technologies such as 5G, Edge-AI/ML, Compute, and IoT to innovative end-to-end systems solutions, including hardware.

These startups have demonstrated exceptional potential in applying advanced connectivity and processing technologies to innovative end-to-end systems solutions. The selected startups will receive free mentorship, business coaching, access to engineering consultation for product development, and guidance on protecting intellectual property.

The 2024 cohort includes the following startups (listed in alphabetical order): Aurora Health from Kenya provides AI-based cardiovascular health care tools, CropScan from Kenya uses solar-powered smart farming IoT devices, Cure Bionics from Tunisia makes smart 3D printed prosthetic arms, DevisionX from Egypt provides AI-based low-code computer vision tools, Kalio from Cameroon is building AI tools for Agricultural IoT, Kitovu from Nigeria provides tools and software for smart agricultural warehouse management, NextAI Studios from Kenya builds AI-based emotion detection into toys for children’s mental healthcare, RIM Nextgen from Kenya, uses smart tools for monitoring propane consumption, Sparcx from South Africa uses AI for enhancing radar signal processing and Vizmerald from Tunisia, is working on AI-based textile industry inspection.

The company also announced the awardee of the 2023 Wireless Reach Social Impact Fund. This fund, provided by Qualcomm through its Qualcomm® Wireless Reach™ Initiative, aims to support startups in scaling their societal and market impact. Ecorich Solutions Limited, a female-founded organization based in Nairobi, Kenya,/ will be awarded funding to help scale the impact of their smart organic food composter.

Wireless Reach funding will support Ecorich to address the dual challenge of organic waste management and the need for sustainable agricultural practices, with the goal of reducing environmental pollution, improving crop yields for farmers, and mitigating waste-related health risks for communities. The other nine startups from the 2023 cohort will also receive valuable stipends to continue fueling their growth. These startups have showcased innovative uses of wireless technology to address pressing needs in their communities./

In addition, Qualcomm is excited to highlight the progress of the L2Pro Africa IP e-learning Platform, a free online training program designed to empower startups, SMEs, and researchers in Africa to protect, secure, and maximise their innovations. This program has been created in collaboration with Adams and Adams, Africa’s leading intellectual property (IP) law firm. The education content has been updated with individual filing procedures for patents, industrial designs, and trademarks in the countries of Kenya, Nigeria, Uganda, Ghana, Rwanda and within the two African patent organisations, ARIPO and OAPI. These step-by-step descriptions of per-country filing requirements empower inventors to interact effectively with IP professionals such as an IP attorney and their respective IP offices./

“I am thrilled with the overwhelming response to the Africa Innovation Platform this year,” said President, QTL & Global Affairs, Qualcomm Incorporated, Alex Rogers.

“The quality and diversity of the applications received reflect the immense talent and potential within Africa’s technology ecosystem. We are excited to work with the shortlisted startups and provide them with the necessary resources and support to drive innovation and create a positive impact in their communities.

“We applaud Qualcomm for launching the second year of its Innovate in Africa Platform, which not only equips the upcoming generation of African entrepreneurs with expertise in pivotal areas like AI/ML, healthcare, agri-tech, smart cities, and communications but also empowers them to safeguard their intellectual property through the complimentary L2ProAfrica program,” said Secretary General, African Telecommunications Union (ATU), John Omo./

Mr. Omo also emphasised that the ATU remains steadfast in its commitment to fostering innovation and entrepreneurship across the continent.

“Our youth innovation program, among other initiatives, plays a crucial role in cultivating the talents and aspirations of Africa’s young visionaries,” he affirmed. “We are ready to collaborate with additional partners to realize this objective.”