Muhammad Nami, the Executive Chairman of the Federal Inland Revenue Service (FIRS), has stated that the FIRS has refused to sign the Organisation for Economic Cooperation and Development (OECDG20 )’s Inclusive Framework solution to the taxation of the digital economy because some of its provisions would prevent some digital companies from being taxed.
Nami said the agreement is unfair to Nigeria and developing countries because most digital companies do not generate as much revenue as the agreement proposes before being taxed.
“For example, to tax any digital sale or any multinational enterprise (MNE), the company or enterprise must have a global annual turnover of €20 billion and a global profitability of 10%. This is something to be concerned about. Because the vast majority of MNEs operating in our country do not meet these criteria, we would be unable to tax them.”
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“Secondly, the €20 billion global annual turnover in question does not apply to a single accounting year; rather, the enterprise must generate €20 billion in revenue and maintain a 10% profit margin for four years in a row, or it will never pay tax in our country,” the statement read.
He pointed out that the rule requiring multinational companies to pay tax after generating at least €1 million in revenue from Nigeria within a year is unfair because domestic companies with a minimum of N25 million (€57,000) in revenue must pay company income tax.
