Nigeria proposes to the United Nations alternative pathways to fight tax evasion

2022 Dec.15

Nigeria has submitted, while representing 54 countries of the United Nations (UN) African Group, a Resolution for new anti-tax evasion rules, more favorable to the interests of developing countries, especially African ones, than Organisation for Economic Co-operation and Development (OECD)’s Pillars I and II. These measures seek to adapt worldwide taxation, due to the digitalization of the global economy.

The request for new rules is justified by the fact that less than half of African nations currently implement Pillars I and II, elaborated chiefly by OECD and G20, composed predominantly by developed nations. African countries were not consulted during the formation of the international tax system – since many of them were not independent at the time – in spite of being the most affected by the tax evasion promoted by authoritarian governments and multinational companies.

One estimates that African countries lose, every year, roughly $50 billion in illegal transactions, such as cash flows to offshore banking accounts. Thus, they are interested in higher immediate taxation over mobile payments and digital services, and in increasing the minimum global tax rate of 15%, established by OECD’s Pillar II.

These countries already tax multinationals at rates between 25% and 35%, to compensate for income evasion, and often do not hold branches and subsidiaries with revenues over 750 million euros, subject to Pillar II’s minimum tax rate. There is also an opposition to Pillar I, which prohibits taxes over digital services (DST’s), more efficient in Africa than traditional taxes, and already adopted by Kenya, Nigeria, Zimbabwe and Ghana.

The Nigerian Resolution requested to the UN’s Secretary General a coordinated analysis of the instruments, documents and legal recommendations that currently create international fiscal transparency, and the creation of an intergovernmental committee to produce recommendations. These procedures, included in the agenda of the next session of the General Assembly, must consult and involve the countries of the African group.

Related attorneys: Luis Felipe de Campos / Gabriel de Sá Balbi Cervino /