FIRS seeks increased collaboration among African countries in improving digital tax businesses

The Federal Inland Revenue Service (FIRS) has said that it was seeking increased collaboration among African countries on effectively driving digital tax businesses.

A statement the FIRS issued on Tuesday, May 10, 2022 stated that its Executive Chairman, Muhammad Nami, made the call last Friday in Lome, Togo, at a Technical Assistance Programme organised by African Tax Administrators’ Forum’s (ATAF)

The organization is also exploring alternative rules that will enable market jurisdictions and laws to accommodate this vision among African member-countries.

The theme of the programme was ‘Member’s Needs and How To Broaden the Collaboration.’

Nami, in his presentation at the event, stated that although some African countries had endorsed the Organisation for Economic Co-operation and Development (OECD) Inclusive Framework’s global solution on the tax challenges of the digitalized economy, Nigeria continued to maintain its position that the outcome would not be favourable to African countries.

“Nigeria continues to hold the view that the outcome will produce very minimal revenue comfort for African countries. This is instructive considering the implementation challenges that developing jurisdictions will face due to the complexity of the Pilar 1 and 2 rules.

“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, as well as collaborate 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 stated.

He further called on ATAF to collaborate with the United Nations Development Programme (UNDP) to explore opportunities for Africa within the programme’s Tax for Sustainable Development Goals Initiative, to ensure that African countries were able to generate appreciable revenue to fund the Sustainable Development Goals.

While discussing the needs of the West African region that requires Technical Assistance of ATAF, the FIRS Chairman noted that there was the need for building capacity for 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 countries’ tax administration through the digitisation of operations.

Also, critically needed by tax authorities in the West African region, he pointed out, was the development of data analytics intelligence expertise and the use of research tools required for taxation in a modern economy.

Nami urged ATAF to organise peer-to-peer knowledge sharing sessions between beneficiaries of the technical assistance programmes, while also intensifying on its technical assistance on international tax rules, particularly in the areas of tax treaties, transfer pricing, and information exchange.

The ATAF Technical Assistance (ATAF-TA) programme aims at helping members build sustainable and efficient tax systems, while achieving its strategic plans to increase domestic resource mobilisation, target the development of African expertise and support Africa’s effective voice in the international tax environment.