It is no news that a major attraction for companies in the diaspora looking to invest their resources in especially developing nations like Nigeria is the level of tax incentives or palliative as the case may be, not minding the consequence on the host nation. Just like other nations in this category, Nigeria is also bleeding from providing one form of tax palliative or the other to multinational companies operating within the country.
In a recent report by the Civil Society Legislative Advocacy Centre, CISLAC, Nigeria as it stands, part ways with about US$2.9 billion yearly to tax waivers granted to multinational companies. Furthermore, the report puts it clear that the prevalent nature of Illicit Financial Flows connected with corruption, crime, and tax evasion has put the nation in a more delicate financial state.
The study also took into perspective the depleting state of Africa’s resources as the continent lost US$1 trillion in illicit financial flows (IFFs), out of which US$50 billion is lost annually over the last 50 years.
Details of CISLAC’s Report as released by its Executive Director, Auwal Rafsanjani, indicate that these red flags in form of IFFs have depleted in no small measure, resources ought to be transferred to sustainable financial development.
On the flip side, the report shows that the wealthiest people in Africa have thrived during the period under review as their wealth has expanded from US$16.8 billion in March 2020 to US$23.2 billion by July 2021.
Another eyeopener from the report is that the amount lost to IFF in Africa is roughly equivalent to all of the official development assistance (ODA) received by Africa during the same period.
What CISLAC is saying in specifics,
“International Monetary Fund and World Bank have all expressed concerns over the likely sharp increase in inequality and poverty arising from the pandemic.
“This is with estimates projecting that 42.1 percent of the sub-region will be pushed into extreme poverty.
“Worse yet, the World Bank further indicated that the poverty increase could take more than a decade to reverse, erasing all hopes of countries meeting their national development plan targets to reduce poverty and inequality by 2030.
“On the other hand, the wealthiest people in the region fare differently, as the three wealthiest men in the region, who are all based in Nigeria, have seen their wealth expand from US$16.8 billion in March 2020 to US$23.2 billion by July 2021.’’
“Public Registers of Beneficial Ownership are important tools for advancing the fight against corruption, tax abuse, asset shielding, and illicit financial flows, and so on.
“Registers of beneficial owners are assisting in no small measure to expose corruption orchestrated by ultimate beneficial owners who ore individuals who ultimately own, control or benefit from registered corporate entities.
Recommendations from Expert
- Tackling the issue of IFFs according to expert portends a much more bigger crisis for Nigeria than the issue of tax avoidance.
- The need for a global partnership enabled by technology to tackle tax evasion among others is crfitical to winning the war against sharp practices.