Cash-strapped Nigeria among low income nations losing billions to unfair tax treaties

Nigeria, one of the world’s leading oil producers currently feeling the pressure from the negative impact of declining global crude oil prices is also among 25 low-income African and Asian countries reeling from the pain of losing billions of dollars annually through unfair tax treaties.

This is one of the key findings in a new report by ActionAid International titled: ‘Mistreated: How shady tax treaties are fuelling inequality and poverty’.

Statistics in the publication showed that the 25 countries have “the highest number of very restrictive modern era treaties that severely limit their taxing power.”

Although Ethiopia has the highest number of restrictive tax treaties on the African continent (13), the report said Ghana led the chart among the Economic Community of West African States (ECOWAS) with 11 treaties.

Equally, Nigeria was tied with two other West African countries, Côte d’Ivoire and Senegal, with six restrictive tax treaties each, while Bangladesh topped the restrictive tax treaties’ table with 18 treaties, followed by Mongolia (15) and Pakistan (14).

Globally, Guinea, Mali, and Papua New Guinea are tied at the bottom of the table with two treaties each, followed by Kenya and Benin Republic with three treaties apiece, and Tanzania, Sudan, Philippines, Mozambique and Gambia with five treaties each.

Section 8a of the report under the subhead ‘Dividends’ revealed that, “Billions of dollars in dividends – pay-outs to the owners of a company – leave poor countries in Africa and Asia each year.”

Country Director of ActionAid Nigeria, Ojobo Atuluku, said the implications of restrictive tax treaties was a huge burden on developing countries like Nigeria, describing the situation as “exploitative and at variance with the global drive to end inequality.”

ActionAid’s International Tax Campaign Manager, Savior Mwambwa, said in a blog post explaining the implications of the restrictive tax treaties, the organisation’s research “has cracked open the opaque tax treaties system and revealed three main problems.

Apart from billions of revenue lost by developing countries to tax treaties, the problem deprive the affected countries money to fund health and education, and other essential services that fulfil the rights of women and girls.

Mr. Mwambwa’s blog, posted on the ActionAid International website, further cited inequality as the second problem with restrictive tax treaties.

“Many tax treaties between lower and higher income countries are unfair and take away more tax rights from the lower income country, often ensuring that money flows untaxed from poor to rich countries. This can only worsen global inequality,” he said.

Also of significance, Mr. Mwambwa noted that some higher income countries are particularly restricting the power of lower income countries to tax global companies.

The UK and Italy tied as the countries that have entered into the highest number of very restrictive tax treaties with lower income African and Asian countries.”

Mr. Mwambwa, said with restrictive tax treaties, multinational companies are not paying certain types of tax at all in any country.”

Mr. Atuluku called for “the cancellation of restrictive tax treaties as they are unfair, unconscionable and designed to perpetuate the inequality gap between developed and developing countries.”

“Tax treaties that restrict the tax rights of low and lower-middle income countries should be urgently reviewed,” he said. “All governments should subject treaty negotiation, ratification and impact assessments.

He proposed that all governments should consider the development implications of their tax treaties,” adding that multinational companies should be transparent about their interactions with developing countries’ lawmakers and officials regarding treaty terms.”


NEVER MISS A THING AGAIN! Subscribe to our newsletter

* indicates required

DOWNLOAD THE PREMIUM TIMES MOBILE APP

Now available on

  Premium Times Android mobile applicationPremium Times iOS mobile applicationPremium Times blackberry mobile applicationPremium Times windows mobile application

TEXT AD: To place a text-based advert here. Call Willie - +2347088095401


All rights reserved. This material and any other material on this platform may not be reproduced, published, broadcast, written or distributed in full or in part, without written permission from PREMIUM TIMES.