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Ireland is Right to Resist US and OECD Led Calls for Global Corporation Tax Rate

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Evaluation of Public Accountability and Tax Culture among Tax Payers in Nigeria

Ireland is right to resist a global minimum corporation tax rate which could end up being a “masterclass in the law of unintended consequences”, affirms the CEO of one of the world’s largest independent financial advisory and fintech organisations.

The comments from Nigel Green, the chief executive and founder of deVere Group, come as Ireland’s finance minister, Paschal Donohoe, signalled the country will push back against attempts to rework the global tax system.

The Organisation for Economic Co-operation and Development (OECD) has been holding talks among 140 countries for several years and now says it hopes to reach a consensus by mid-2021.

Its plans have been given a boost by the Biden administration’s support for a minimum global corporate tax rate. “We’ve had a global race to the bottom in corporate taxation and we hope to put an end to that,” said the U.S. Treasury Secretary Janet Yellen at a hearing in Washington last month.

deVere’s Nigel Green says: “Ireland is right to resist the U.S.-backed calls for a minimum global corporation tax. The plans are misguided and could turn out to be a masterclass in the law of unintended consequences.

“The lack of flexibility would considerably hinder countries’ ability in employing tax policy to generate foreign direct investment (FDI).

“This means that countries which are not especially appealing for investment, except for a low tax regime, will be left hugely disadvantaged.

“Foreign companies and international agencies would likely move elsewhere where there are low taxes as well as other important attractive draws, taking with them direct and indirect jobs and wealth, plus all the other associated benefits of FDI.”

He continues: “America’s call for a global minimum tax is also likely to further disadvantage developing economies.

“Whilst the minimum rate is not yet stated, but once it is, a multinational’s tax rate in each jurisdiction will be set against that minimum and if a lower rate is paid in that jurisdiction, a top-up tax will be demanded. And that extra tax-take will go where the parent company is domiciled.

“Considering that the majority of the world’s major corporations are in developed countries, namely the U.S., it seems the plans are tilted towards the wants and needs of those nations, and in particular of the U.S., already the world’s largest economy.”

The lack of autonomy is another reason why a blanket global corporation tax could curb economic growth, says Mr Green.

“Each country has unique economic characteristics and challenges.  Under the plans, would a country be able to support certain key sectors of their economies, such as tourism or agriculture, by offering rebates when needed for example?  It seems unlikely.”

In addition, for many companies, a global minimum corporation tax will hike their costs of doing business around the world. “Is this then the right policy to pursue as the world is trying to reboot after the pandemic?” asks Mr Green who also argues that these higher costs will ultimately be passed on to consumers and suppliers.

The deVere boss also says that the plans may be flawed as each nation will maintain its unique set of complex exemptions and loopholes that could still be used by powerful corporations.

He concludes: “A global minimum corporation tax rate will do little to level the playing field, and it might make it worse.

“Keeping tax and business policies competitive will help economies recover stronger and quicker.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Business

Economists Evaluate Nigeria-China Currency Swap

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500 and 1000 naira bills (Nigerian currency)

Some Financial Economists have expressed great concerns about the minor influence that the Nigeria-China currency swap had on the country’s economy, three years after.

The experts told the News Agency of Nigeria (NAN) in Lagos on Friday that the volume of currency import so far traded had not been significant, though a few swaps took place.

The pact which marked three years of implementation in April was signed on April 27, 2018, to ease demand pressure on the country’s supply of foreign exchange.

The Chief Executive Officer of Arvo Finance, Mr. Ayotunde Bally, said that the pact had not been fully utilised due to a decrease in the drawdown of the money input of the Chinese Yuan to the Central Bank of Nigeria.

“This pact which was aimed at creating a harmonious relationship between the two countries has not been utilised as it ought to be. Statistics have it that Nigeria-China bilateral trade which was around 2 billion dollars in 2002 is within the space of about 14 billion dollars in contemporary years. And yet, we cannot boast of about three billion dollars Yuan being utilised in such market transaction,’’ he said.

According to Bally, that has clearly displayed the negligence of the pact by most business importers

He said the poor state of the pact was due to ignorance and the benefits of the pact to those who utilise it.

“Also, the deliberate avoidance of the pact by those who believe transactions are easier with dollars or some other methods like Bureau De Change among others. Even those who know about the pact but avoid it, indicating that it is not lucid and that the regulations and procedures are rigid to them,” he told NAN.

He advocated massive sensitisation on the usefulness of the pact to both the business individuals and the country at large.

Mr. Johnson Chukwu, Founder of Cowry Asset Management Limited, also said that the pact recorded minimal benefit to the economy.

“If you look at our demand for foreign exchange particularly for imports, you will observe that we still have pressures coming from import demand. China is our biggest trading partner and our largest import market.

“We bought more products from China than any other country in the world. So, if the currency swap has been very significant, then the pressures we are witnessing on the balance of trade would have been abated.

“So, I do not think the volume of currency import has been significant. Certainly, there must have been a few swaps that have taken place since then but it is clearly not significant because if it was, it would have reflected in our balance of trade,” Chukwu said.

According to him, China accounts for more than 25 percent of our imports; so we should not have a currency swap that delays immediate payments of our foreign reserves.

Also, Prof. Ndubisi Nwokoma, Director, Centre for Economic Policy Analysis and Research (CEPAR), University of Lagos, said that the swap deal had a positive impact on the naira exchange rate with major currencies.

“The Nigeria-China currency swap deal, according to reports, has some positive impact on the stability of the naira exchange rate with major currencies. But, its effect is limited by the volume of trade between Nigeria and China.

“With the decline in global productivity occasioned by the COVID-19 pandemic and other factors, the effect appears not to have achieved the originally intended objectives.

“Nigeria has been bedeviled by other economic challenges. The current sorry state of the country’s exchange rate is quite instructive in this regard,” Nwokoma said.

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Brands

Unilever Nigeria to Create New Company For Tea Business

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Unilever Nigeria Plc

Unilever Nigeria Plc announced on Friday that its Board of Directors had approved the steps required to implement the separation of its tea business in Nigeria.

The approval on April 30, 2021, followed the announcement made on Feb. 25 about Unilever Nigeria’s planned separation of its tea business as part of the global separation, according to a statement obtained from the Nigerian Exchange Limited.

The company noted that on 23 July 2020, following the completion of a strategic review, Unilever Plc announced its intention to separate its global tea business, including the retail and food solutions businesses, plantations, T2 and Pukka.

It said, “Subject to approval by the company’s shareholders and any regulatory approvals, the Nigeria Tea Business will be transferred to a newly incorporated tea company in Nigeria (New TeaCo), held under a newly incorporated tea holding company to create a dedicated tea group within the Unilever Group (TeaCo Group).

“The assets being transferred by Unilever Nigeria Plc to New TeaCo include production assets and other tangible assets used exclusively in relation to the tea business; distribution rights to tea products in Nigeria and export markets; and locally owned unregistered intellectual property rights.”

According to the statement, Unilever Nigeria will retain ownership of the site at Agbara.

“Unilever and Unilever Nigeria Plc will also provide certain intercompany services to the New TeaCo and the TeaCo Group for a transitional period,” it said

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Appointments

Nigerian Breweries Picks Hans Essaadi to Replace Borrut Bel as MD/CEO

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Hans Essaadi - Investors King

Nigerian Breweries, the largest brewing company in Nigeria, has appointed Mr. Hans Essaadi as the Managing Director and Chief Executive Officer (CEO) effective 31st, July 2021.

Mr. Essaadi will replace Mr. Jordi Borrut Bel, the current Managing Director and Chief Executive Officer of Nigerian Breweries who will be completing his tenure on the 30th of July, 2021.

Mr. Borrut Bel is expected to take up another assignment within the Heineken Group, hence why the Board accepted his letter of resignation.

Mr. Hans Essaadi Profile

Mr. Essaadi, is currently the Managing Director of Al Haram Beverages, the HEINEKEN Operating Company (“OpCo”) in Egypt and joined the HEINEKEN Group as a Sales Representative in 1991.

He subsequently took up increasingly senior roles within the Group in Sales, Export and Marketing. He commenced his international career with HEINEKEN Puerto Rico as the Country Manager, and thereafter became the General Manager, Brau Union International, the HEINEKEN OpCo in Austria.

Before his current role in Egypt, he was General Manager, Siroco (the HEINEKEN Joint Venture with the Emirates in Dubai) and Managing Director, HEINEKEN Malaysia Berhad, a listed company in Malaysia.

The Board is pleased to have a person of Mr. Essaadi’s experience and knowledge to take up the position of Managing Director/CEO of the Company and to continue the turnaround work started by Mr. Borrut Bel.

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