How Nigeria, Other African Countries Can Effectively Tax Digital Businesses–FIRS

The Federal Inland Revenue Service has stated that there is need for improved collaboration among African countries to effectively tax digital businesses.

In a statement issued on Wednesday, the Executive Chairman of the FIRS, Muhammad Nami was said to have made the recommendation at a technical assistance programme organized by African Tax Administrators’ Forum.

The theme was “Member’s needs and how to broaden the collaboration,” which held in Lomé, Togo.

Nami said there is need to explore alternative rules that will enable market jurisdictions, particularly African countries, to effectively subject digital businesses to tax.

Nami in his presentation noted that although some African countries had endorsed the Organisation for Economic Co-operation and Development OECD, there is need for global solution on the tax challenges of the digitalized economy.

Nami said, “If Nigeria continues to hold the view, the outcome will produce very minimal revenue comfort for African counties.

“This is instructive considering the implementation challenges that developing jurisdictions face due to complexities.

“Our analysis continues to show that the possible cost of administering and implementing the complex rules will far outweigh the expected revenue accruing from its implementation.

“I therefore urge the African Tax Administrators Forum to join the discussion at the UN Tax Committee of Experts, South Centre collaboration with all other well-meaning stakeholders to explore alternative rules that will enable African countries to effectively subject the digital businesses and base eroding payments to tax in our jurisdictions.

“These collaborations should extend to other rules developed and implemented at the international level for the taxation of Multinational Enterprises, such as the tax treaty, exchange of information and transfer pricing rules.”

He further called for the African Tax Administrators Forum to collaborate with the United Nations Development Programme to explore opportunities for Africa within the programme’s tax for sustainable development goals initiative.

Nami noted that there was need for capacity building of members in respect of Base Erosion and Profit Shifting Actions by Multinational Corporations, as well as on the taxation of the digital economy.

“It is crucial for the ATAF Technical Assistance to look towards improving the capacity of member country’s tax administration, through the digitisation of operations.

“Also, critically needed by tax authorities in the West African region is the development of Data Analytics intelligence expertise and the use of research tools that are required for taxation in a modern economy,” he highlighted.”

Nami further urged the African Tax Administrators Forum to organise peer-to-peer knowledge sharing sessions between beneficiaries of the Technical Assistance programs.