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

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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.

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Nigeria signs multi-sectoral agreements with Qatar

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President Bola Tinubu on Sunday witnessed the signing of agreements between Nigeria and Qatar in various sectors of the economy.

Chief Ajuri Ngelale, the Special Adviser to the President on Media and Publicity, in a statement, said the signing, which held in Doha, Qatar, was also witnessed by the Emir of that country, Sheikh Tamim Al-Thani.

The agreement, according to Ngelale, will open opportunities for mutual cooperation in pivotal sectors of education, enterprise development, investment promotion, youth empowerment, mining, tourism and sports.

Tinubu assured his host of Nigeria’s preparedness to welcome investors into the country, citing the ongoing reforms that favoured innovation, return on investments and multiculturalism.

“Our greatest strength is our people. Our strength lies in the capacity of Nigerian youths.

” They have energy, talent and self-belief.
” They are quality partners for Qatari industry.

”They are educated and reliable, and they are proactively seeking to add value wherever they are.

” A few cannot give a bad name to the many. Nigerian youths are ready to be unleashed for the mutual benefit of both nations.

“We have seen clearly the rapid pace and thorough quality of Qatar’s development process. It is impossible not to be moved by what you have accomplished.

” The leadership in the country has proven its mettle, and we are here to gain deeper insight.

“There is nowhere in the world where you will find return on investment at the level of what you will see in Nigeria. A massive market of over 200 million skilled Nigerians, always industrious and ready to work.

“We face some short-term turbulence at the moment, but we have a government today that reflects the dynamism and talent of the Nigerian people.

” We are implementing the right solutions.

” This team works collaboratively with each other and our partners,” the president said.

Al Thani, on his part, said he was open to Nigeria’s investment push, recalling his journey to Nigeria in 2019 due to his belief that the country is an important and strategic ally on its own and in regional affairs.

“I have no doubt about the great capacity of the Nigerian people. Everywhere in the world, they are known for their brilliance and hard work.

” We only need to ensure that this is happening inside of Nigeria rather than outside.

”The investments we have made around the world have been very fruitful.

” This is because we take our time and study opportunities before we invest the commonwealth of our people.

“Mr. President, I am very encouraged by your actions and your passion to create new opportunities.

” We are very open to this, and follow-up is everything at this point. The will is there for both of us, but we must follow up.

”I will send a team of officials to Nigeria after Ramadan, and we will advance discussions on what some of the actionable investment opportunities are,” the Qatari leader said.

Tinubu immediately named the Coordinating Minister of the Economy and Minister of Finance, Mr Wale Edun as the team leader of the government team that would interface with Qatari authorities in investment identification and implementation.

During the bilateral deliberations, the president enabled a brief presentation to the Emir by the Minister of Solid Minerals Development, Dr Dele Alake, who spoke in details about the high-grade of several minerals, including lithium.

Alake spoke about derivable potential across the country with an emphasis on imminent opportunities for local mineral processing and value-additive industry in the sector.

The bilateral engagement was followed by a closed-door meeting between the two Heads of State before they proceeded to the signing ceremony for seven bilateral agreements across multiple sectors.

The seven agreements signed include cooperation agreement in the field of education and regulation of employment of workers with the Government of Qatar.

Also signed was the agreement on establishment of a joint business council between the Qatar Chamber of Commerce and Industry and the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture.

Agreements were also signed in the field of youths and sports, tourism and business events and a memorandum of understanding on combating illicit trade in narcotic drugs and psychotropic substances.

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Invest in education to grow knowledge Economy – Dangote advises FG

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By Aminu Mohammed, Kano

President of Dangote Group, Alhaji Aliko Dangote Industries Limited has urged the Federal Government to invest hugely in education and skills acquisition so as to grow the knowledge economy.

Speaking on Friday as a Guest Lecturer at the 38th Convocation Lecture of Bayero University Kano (BUK), Dangote said for Nigeria’s Knowledge Economy to thrive, the nation must invest hugely in education and research, information and technology, innovation and entrepreneurship, human capital develoment, intellecrual property (IP) protection, industry-academia collaboration, creative industries, global connectivity.

Represented by Engr. Mansur Ahmed, Dangote  delivered a lecture entitled: “Role Of  The Private Sector In Building A Sustainable Knowledge Economy In Nigeria.”

According to him, for Nigeria to leverage and nurture a sustainable Knowledge Economy, the Federal Government must invest in education and skills development.

Dangote listed other factors that can grow Knowledge Economy in Nigera to include:  promotion of research and development; digital infrastructure development; entrepreneurship and innovation support; circular economy integration; government policies regulation.

Others include: public private partnership (PPP); environmental stewardship; digital inclusion and accessibility; communuty engagement and social impact.

He further stated that: “by adopting these recommendations, we can lay the foundation for a sustainable knowledge economy that prioritizes environmental sustainability, social inclusion, and innovation.

” The successul implementaion of these strategies requires a collaborative à effort from all stakeholders, with a shared commitment to the principles of a knowledge-driven snd sustainable future.”

Dangote, however, observed that: “A major challenge in transiting to Knowlesge Economy  for Nigeria is the quality of the Nigerian worker,”  opining that:  “The quality of human assets matters a lot in the operations of a firm.”

According to him: “Our educational system which produces most of the human assets working in various firms in Nigeria needs to be modified to yield the desires results.

” The system as presently constituted produces graduates who may have excellent qualifications but lack the necessary skills to perform optimally in a knowledge driven economy.

“We have thousands of graduates on a yearly basis, but selecting those with the required skills is often a tough task. The esucational system should incorporate findings from the research instutitions in their programmes asbwell as relevant management skills that would equip students for excellence after their studies.”

He insisted that: “Knowledge gap among workers is a major limiting factor that hinders many firms operating in Nigeria from achieving the desured results.”

Accorsing to Dangote, Nigeria’s Knowledge Economy value chain plays a crucial role in shaping its economic landscape.

In his welcome address, the Vice Chancellor of BUK, Prof. Sagir Adanu Abbas noted that in BUK, Dangote is a trademark that rings a bell, courtesy of the Dangote Business School singlehandedly built and donated to the Uinversity by Alhaji Aliko Dangote.

He added that: “Established about a decade ago, Dangote Business School has produced thousands of postgraduates.”

“Indeed, the establishment of Dangote Business School has added a lot of value to the Bayero University, Kano with the School moving on from strenght to strenght and making  a name beyond the shores of Nigeria.”

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ICEGOV2024: FG calls for submission of research papers to strengthen global leadership in digital governance

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The Federal Government of Nigeria has called for the submission of research papers in lieu of the country’s participation at the 17th Edition of the International Conference on Theory and Practice of Electronic Governance (ICEGOV).

ICEGOV is an annual gathering of academia, governments, international organisations, civil society, and industry to share the latest insights and experiences in the theory and practice of Digital Governance. The United Nations University (UNU-EGOV) organises the international conference in collaboration with the United Nations Educational, Scientific and Cultural Organization (UNESCO).

The ICEGOV2024 will take place in Pretoria, South Africa from the 1st to the 4th of October 2024 at the University of Witwatersrand, Johannesburg with a main theme of “Trust and Ethical Digital Governance for the World We Want.”

The FG noted that its participation is spurred by an objective to deepen Nigeria’s position in global research in key technology areas (the top 25 percentile) as proposed in the FMCIDE strategic plan and also strengthen Nigerian research leadership in digital governance in the Global South.

ICEGOV2024 presents a great platform for Nigeria to further strengthen its evidence of digital governance position by presenting well-researched and world-class papers from academia, industry and the government.

According to a statement, Nigeria is planning to host a workshop at the ICEGOV.

“This is to further support DPI’s effective design and implementation by the Federal Government.

“Interested researchers from the wider academic networks are called to submit papers tailored to the workshop’s theme Designing and Implementing Scalable and Inclusive Digital Public Infrastructure (DPI) in African Context.

“The DPI-tailored paper should be submitted into the following tracks of the conference; Track 1: Trust and Ethical Digital Governance for the World We Want. Track 4: Digital Transformation and Innovation in the Public Sector.

“Track 7: Future-ready Digital Workforce and Infrastructure Development. Track 10: Public and Private Sector Governing Digital Economies; and Track 11: Focus on the Global South Digital Transformation Sponsorship.

“The main author of the top three selected DPI-tailored papers will be sponsored to participate in the Special Workshop.

“If your paper is accepted by ICEGOV, kindly notify NITDA by forwarding an acceptance notification by ICEGOV to llamid@nitda.gov.ng on or before 12 July 2024.”

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