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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.

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Appointments

Union Bank Announces the Appointment of Aisha Abubakar as Independent Non-Executive Director

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Union bank - Investors King

Union Bank of Nigeria Plc (“Union Bank”) has announced a change to the membership of its Board of Directors with the appointment of Ms. Aisha Abubakar as an Independent Non-Executive Director effective 9th September 2021, following the approval of the Central Bank of Nigeria (CBN).

Ms. Abubakar joins the Board of Union Bank following her tenure as Nigeria’s Honourable Minister for Women Affairs and Social Development from 2018 to 2019. Prior to this, she also served as the Honourable Minister of State for Industry, Trade and Investment between 2015 and 2018. At the start of her career, Ms. Abubakar worked at Continental Merchant Bank Ltd., African Development Bank and African International Bank.

She is an accomplished public sector administrator with over three decades of professional experience in Public Service and Pension Administration, Investment Banking, SME Finance/Rural Enterprise Development and Micro-Credit Administration.

Ms. Abubakar is a Fellow of the International Professional Managers Association (IPMA-UK), and the President of the International Experts Consultants (IEC-UK).

Commenting on the addition to the Board, Mrs. Beatrice Hamza Bassey, Union Bank’s Board Chair said: “On behalf of the Board of Directors, I welcome Ms. Aisha Abubakar to the Board. She brings many years of robust experience which will be invaluable in supporting our efforts to steer the Bank forward and deliver on our strategic objectives.”

Also commenting, Chief Executive Officer, Mr. Emeka Okonkwo said: “I am pleased to welcome our new Independent Non-Executive Director, Ms. Aisha Abubakar to the Board. We look forward to drawing from her wealth of experience and fresh perspectives as we continue to execute our vision to be Nigeria’s most reliable and trusted partner.”

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AfDB Approves $50M Trade Finance Deal with Standard Chartered Bank

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The African Development Bank Group has approved a $50m Trade Finance Unfunded Risk Participation Agreement (RPA) for StandardChartered Bank.

This was contained in a statement titled ‘African Development Bank approves a $50m Multinational Trade Finance Risk Participation Agreement facility for Standard Chartered Bank’ published on the bank’s website on Wednesday.

The statement said, “The board of directors of the African Development Bank Group has approved a $50m Trade Finance Unfunded Risk Participation Agreement facility between the African Development Bank and Standard Chartered Bank.”

The essence of this agreement is to promote intra-Africa trade, ensure regional integration and lessen the trade finance gap in Africa.

“The agreement is expected to boost intra-Africa trade, promote regional integration, and contribute to the reduction of the trade finance gap in Africa, in line with implementation aspirations of the African Continental Free Trade Area,”

The bank’s Director for Financial Sector Development, Stefan Nalletamby, stated that “We are excited about finalising this facility with Standard Chartered Bank as it offers us the flexibility to use our strong AAA-rated risk-bearing capacity to increase access to trade finance and boost intra/extra-African trade on the continent, in support of the AfCFTA.

“This partnership is expected to catalyze more than $600m in value of trade finance transactions across multi-sectors such as agriculture, manufacturing and energy over the next three years.”

Director-General of the bank’s Southern Africa region, Leila Mokadem, was quoted to have said, “The advent of COVID-19, coupled with stringent regulatory/capital requirements and Know Your Customer compliance enforcement, has seen many global banks reduce their correspondent banking relationships in Africa, while some are exiting the market altogether.

“There is, therefore, an urgent need for financing to reenergise Africa’s trade, which requires more participation of institutions like the African Development Bank.”

The parties in the agreement are expected to share the default risk on a portfolio of eligible trade transactions originated by African Issuing Banks and indemnified by Standard Chartered Bank.

Beneficiaries of this facility are issuing banks in Africa with the ability to grow their trade finance business has been constrained by inadequate trade confirmation lines from international banks.

Other beneficiaries are small and medium enterprises (SMEs) and domestic firms which rely on these issuing banks to fulfill their trade finance commitments.

The RPA facility is aligned with the AfDB’s High 5 priority goals which are: light up and power Africa, feed Africa, industrialize Africa, integrate Africa, and improve the quality of life for the people of Africa.

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SMEs

Standard Chartered Launches Flexible ‘Smart Business Loan’ Product To Support SMEs

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Standard Chartered Nigeria - Investors King

Standard Chartered on Wednesday launched its Smart Business Loan (SBL) product to support Small and Medium Scale Enterprise (SMEs) in Nigeria.

David Idoru, Head of Consumer, Private and Business Banking, of the bank in Nigeria, said in a statement in Lagos that SBL was an unsecured installment/term loan available to SME clients within key target sectors.

“Qualified SMEs would be able to access up to N20million loan, without providing tangible security/collateral to purchase asset, finance business expansion and other capital expenditure needs.

“This loan was designed to help SMEs meet their short to medium-term needs.

“As a Bank, our purpose is to drive commerce and prosperity in the locations we operate in. This is done through offering cash, lending, trade and wealth management solutions that specifically drive economic growth,” he said.

Idoru said that the bank was constantly looking for ways to ensure SMEs get access to the needed support to enable their businesses to thrive, adding that prior to the product launch, clients were required to provide full collateral cover to access loans from the bank, but SBL had been designed to provide the necessary flexibility to the clients.

“It is accessible to new and existing clients of the Bank with no waiting period, including small and medium scale organisations, who can access up to N20million in loans without collateral for a maximum tenure of two years,” he said.

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