The Federal Inland Revenue Service (FIRS) recently issued a Public Notice highlighting Nigeria’s rationale for not yet signing off on the OECD’s 2 Pillar Solution (the “Agreement”) for taxing digital companies.
Some of the reasons put forward by the FIRS include:
- MNEs are required to have annual global turnover of €20bn (about N9trn) and profitability of 10%, to be subject to the taxing rules in the Agreement. This threshold should have been met for 4 consecutive years.
- For MNEs to be subject to CIT in Nigeria, such MNEs must have generated €1m in turnover in the relevant year.
- The Agreement provides for disputes to be resolved by an international arbitration panel, and not under the country’s judicial system.
According to the FIRS, most MNEs that operate in (or with) Nigeria do not meet these criteria and would consequently fall outside the tax net. The FIRS also stated that resolving disputes outside Nigeria may not be favourable to Nigerian companies, and would imply significant legal and other incidental expenses.
Please see our Tax Alert and the FIRS Public Notice here:
Download Tax Alert - FIRS Clarifies Nigeria’s refusal to endorse the OECD 2-Pillar agreement
Download FIRS Public Notice - Nigeria does not endorse the OECD Tax Agreement