The federal government Wednesday announced that it had lost about $1 trillion to tax evasion and avoidance by multinational companies.
The Minister of Information and Culture, Lai Mohammed, who dropped the hint after the Federal Executive Council (FEC) meeting in Abuja yesterday, said to address the problem, multinationals operating in Nigeria would be compelled to provide reports on their operations in other countries.
The federal government also approved the construction of a bigger seaport in Badagry, Lagos State, which will be built by the private sector.
On the stricter regulation of corporate taxation, Mohammed stressed that the government approved an agreement to compel all multinationals operating in Nigeria to file accounts on their operations in other countries, so as to enable the Nigerian tax authorities determine that such multinationals are not hiding taxable incomes from Nigeria.
Mohammad who addressed journalists alongside the Minister for Power, Works and Housing, Babatunde Fashola, and Minister for Transport, Rotimi Amaechi, said two memoranda were approved by FEC.
The first, he said, was the Multilateral Competent Authority Agreement on the exchange of country by country report. This, he said would enable the government to stop tax evasion and avoidance by multinationals.
He said: “In respect of the first memo, which is the memo for Multilateral Competent Agreement and the exchange of country by country report, the whole essence is to give the government a better grip on its tax laws and also prevent tax evasions and avoidance by multinational companies.
“Where multinational companies operate in more than one countries, it is quite easy for them to move profit from one territory to another territory where the tax law is very favourable to them and what has happened over the years is that the revenue authorities have lost a lot of money. As at the last count over $1trillion has been lost over a period of time and the revenue authorities have found that they were losing more money in terms of tax evasion and avoidance than what they were even receiving as grants from multinational agencies.
So this is a law that provides that if a company like MTN or Nestle for instance, is operating in Nigeria, not only must it file returns on his activities in Nigeria, it must also file returns on its activities in every other country that it is doing business so that you can see from there whether there is any attempt to hide figures.
“Apart from shoring up our finances, I think it is part of the fight against corruption and it also enhances transparency.”