Business - News - January 11, 2021

Illicit financial flows: How multinational oil firms fleeced Nigeria of N5.4trn tax revenue in 10 years – FIRS

35 additional Tax Audit Units created tomonitor and enforce all tax obligations .

The Nigerian government on Monday lamented bitterly how the rich multinational oil companies routinely fleeced from the country and illegally funnel abroad huge tax revenues they should pay from their operations.
The Chairman, Federal Inland Revenue Service (FIRS), Muhammad Nami, who spoke in Abuja said the situation has been so bad that between 2007 and 2017, the country lost over $178 billion (about N5.4 trillion) revenue to tax evasion by multinationals firms working in the country.”
Mr Nami spoke at the opening of the “Workshop on Effective Audit of Multinational Corporations for Domestic Revenue Mobilization in Nigeria organized by the FIRS in conjunction with the Tax Justice Network.
Deploying various schemes to illegally these stolen tax revenues abroad, the FIRS Chairman expressed sadness that the rich multinational oil corporations and their collaborators in other sectors of the economy do not pay the right taxes due from their operations, let alone pay their taxes voluntarily.
Although he still acknowledged some multinational corporations for “leading in tax compliance in various sectors of the economy, Mr Nami said the FIRS was determined to stop all forms of leakages through illicit financial flows out of Nigeria and improve tax compliance rate in the country.
As part of the determination, he said the FIRS created 35 additional Tax Audit Units in the country last year and deployed experienced and capable staff to take charge of these offices, to help in the effective monitoring and enforcement of all tax obligations by operators.
He challenged participants in the workshop to task themselves and come up with “a novel methodology that would be used to uncover illicit financial flows” and “provide an overview of related policy options for enhancing tax revenue collection in general.”
Mr. Nami also disclosed that “between 2007 and 2017” Nigeria was “reported to have lost over US$178 billion (about N5.4 trillion at today’s rate) through tax evasion by Multinationals” doing business in the country.
At the FIRS, the Chairman said apart from paying greater attention to tax audits in general, particular attention is given to Transfer Pricing audit to improve the level of tax compliance in the country.
Transfer pricing is an accounting practice where related business parties or subsidiaries of the same company or organization price goods, services, intangible assets, loans, management fees, consultancies and cost of transactions in one jurisdiction and transfer the profits from such transactions to a different jurisdiction.
With the high incidence of declining crude oil export revenue as a result of the devastation of the coronavirus pandemic, taxation is expected to continue to help the government shoulder the huge deficit in the N13.588 trillion 2021 Appropriation Act signed by President Muhammadu Buhari and on December 31, 2020.
Underlining the strategic importance of the workshop to the realization of the overall target of increased revenue generation through tax, Mr Nami said effective tax audit of multinational corporations was crucial the performance of the 2021 budget and the country’s domestic revenue mobilization efforts.
“For me, this Workshop is an important step towards boosting compliance level; and, I have strong hopes that its outcome will further increase our efforts at driving tax compliance among Multinational Corporations in Nigeria,” he said.

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