Finance
Multinational firms dodge $500bn in corporate tax yearly – Study
BY: Sandra Ani
Estimated $500billion in corporate tax is dodged each year globally by multinational corporations in tax havens, a new study, The Corporate Tax Haven Index (CTHI), launched by Tax Justice Network (TJN), claimed on Wednesday.
The CTHI shows an aggressive dispossession of low-income countries’ tax rights spearheaded by the United Arab Emirates (UAE), the United Kingdom (UK) and France.
The affected countries take advantage of minimal, if not non-existent transparency, systemic loopholes and non-implementation of anti-avoidance mechanisms.
Of the 64 countries examined from around the world, nine African countries, namely Botswana, Gambia, Ghana, Kenya, Liberia, Mauritius, Seychelles, South Africa and Tanzania, the CTHI revealed weak tax systems that are constantly exploited resulting in illicit financial flows (IFFs).
The CTHI showed how the United Arab Emirates (UAE) and Mauritius are among the most corrosive corporate tax havens against African countries.
Kenya and Mauritius signed a Double Taxation Avoidance Agreement (DTAA) in May 2012, which Tax Justice Network Africa (TJNA) successfully challenged in the Kenyan high court.
The CTHI’s findings have supported the claims of the High-Level Panel (HLP) on IFFs.
In Nigeria, for example, Chairman, Independent Corrupt Practices and Other Related Offences Commission (ICPC), Prof. Bolaji Owasanoye, said the IFFs are the bane of Nigeria’s growth.
Owasanoye said this at the inaugural meeting of Inter-Agency Committee on Implementation of the Thabo Mbeki Report in Abuja recently.
Mbeki heads African Union’s 10-member High-Level Panel on IFFs. The committee is waging war against illicit financial flows from Africa.
According to Owasanoye, Nigeria is a member of the group.
He said for the country to develop, government agencies must stop money that was going out.
“These monies go out by various measures and the big chunk was by tax evasion, under-hand business and practices by multi-national corporations, among others,” the ICPC Chairman said.
The CTHI reinforces the importance of the Kenya High Court ruling that declared the Kenya-Mauritius treaty null and void by demonstrating the dangers of DTAA signed with tax havens such as Mauritius and UAE in facilitating aggressive tax avoidance, resulting in significant revenue loss for many African countries.
The study reveals the nature of secretive tax havens behind the failure of the global corporate tax system.
CTHI identifies a global network of countries, whose jurisdictions are most responsible for aggressively undermining the ability of governments across the world to meaningfully tax multinational corporations (MNC).
Specific to Africa, the UAE and Mauritius are the continent’s most aggressive countries in terms of driving down the withholding tax rates of countries’ through treaties.
Many African countries are increasingly opening themselves to such exploitation.
For instance, in April 2019 President Uhuru Kenyatta re-signed a DTAA with Mauritius creating a legal conundrum over the treaty, soon after the court ruling invalidated an earlier agreement following TJNA’s petition.
Commenting on the study, the Executive Director of TJNA, Mr. Alvin Mosioma, said: ‘’It is unacceptable that the Kenyan government is shifting the burden of taxation to the ordinary citizen, while deliberately opening doors for the wealthy elite and unscrupulous MNCs to evade and avoid taxes through DTAAs with secretive tax havens.
“As confirmed by the recent IMF study and contrary to popular claims, DTAAs signed by African countries with tax havens do not lead to increased investments.”
Similar to the High Court ruling, this study underscores the position that DTAAs are often abused and provide loopholes for tax avoidance practices taking away revenues these countries direly need to finance their government programmes.
TJNA affirms its demand that the Government of Kenya and other African Governments should review the old and outdated DTAAs, particularly with tax havens, including those with UAE, Netherlands, and Mauritius and ensure that those presently under negotiation do not undermine domestic resource mobilisation efforts.
“Efforts by African countries to address poverty and achieve sustainable development goals will remain a mirage, if these countries do not stem Illicit financial flows and invest in building equitable tax systems,’’ said Mosioma.
The Mbeki panel, in its initial reports, said the IFFs have become a matter of major concern because of the scale and negative impact of such flows on Africa’s growth and governance agenda.
By some estimates, illicit flows from Africa are over $50 billion per annum. This is approximately double the official development assistance (ODA) that Africa receives and, indeed, the estimate may well be short of reality as accurate data does not exist for all transactions and for all African countries.
Some of the effects of illicit financial outflows are the draining of foreign exchange reserves, reduced tax collection, cancelling out of investment inflows and a worsening of poverty.
Such outflows which also undermine the rule of law, stifle trade and worsen macroeconomic conditions are facilitated by some 60 international tax havens and secrecy jurisdictions that enable the creating and operating of millions of disguised corporations, shell companies, anonymous trust accounts, and fake charitable foundations. Other techniques used include money laundering and transfer pricing.
Source: The Nation
Flutterwave, Africa’s leading payments technology company, has announced today that its online merchants in Nigeria can now accept American Express payments.
American Express Card Members – with consumer, business, or corporate cards – will be able to make payments directly to e-commerce businesses using Flutterwave in Nigeria.
This service will also be available to Flutterwave merchants in other countries including Tanzania, Rwanda, Ghana and Uganda in the near future.
This collaboration facilitates online transactions and offers a range of benefits for both merchants and online shoppers:
- Flutterwave merchants can attract business from a new customer base of American Express Card Members in Africa and around the world. This includes consumers with personal cards and spenders with business or corporate products. Terms and conditions apply.
- For shoppers, there is more choice when it comes to being able to select their preferred method of payment when transacting with Flutterwave merchants. This collaboration strengthens the American Express global network and increases the number of locations across Africa that can be used by American Express Card Members to purchase a range of different goods and services.
Speaking on the development, Olugbenga ‘GB’ Agboola, Founder and CEO, Flutterwave, said:“At Flutterwave, we’re always looking for ways to connect the world to Africa through payments. This is one of our initiatives to ensure that more people across the world can pay using Flutterwave in Africa. We understand the value of providing shoppers with payment methods that work for them, as well as helping businesses to expand their customer bases. This collaboration also provides more options of where to shop and what to buy to American Express card holders across the globe. By offering American Express as a method of payment, Flutterwave will make the payment process faster and simpler for American Express card holders, and improve the experience for e-commerce businesses using Flutterwave, helping them to start locally and sell globally.”
On his part, Briana Wilsey, Vice President and General Manager of Global Network Services EMEA at American Express, said: “American Express continues to expand in Africa to enable greater payment choice for businesses and consumers. Through the agreement with Flutterwave, a trusted payment provider, we are giving e-commerce merchants in Nigeria the opportunity to reach American Express Card Members around the world. The collaboration is a win-win because it also increases the number of places where our Card Members can use their Cards in Nigeria.”
Flutterwave and American Express share similar visions; to enable businesses across the world to expand their operations in Africa and other emerging markets through a platform that enables local and cross-border transactions via one Application Programming Interface (API).
Flutterwave has processed over 630M transactions in excess of USD $31B, serves global and African customers like Uber, Air Peace, Bamboo, PiggyVest, and across various industries. On the other hand, American Express is a globally integrated payments company, providing customers with access to products, insights and experiences that enrich lives and build business success.
…Posts N3.3trn Net Profit, Declares N2.1trn Dividend
…Targets 2mbpd Crude Oil Production by December 2024
The NNPC Limited has released its 2023 Audited Financial Statement (AFS), declaring a net profit of N3.297 trillion at the close of the financial year which ended in December 2023, an increase of over N700billion (28%) when compared to the 2022 profit of N2.548trillion.
In a world press conference held at the NNPC Towers in Abuja on Monday, the Chief Financial Officer of the Company, Mr. Umar Ajiya said the release of the AFS is a testament to the Company’s commitment to transparency and accountability.
“Our fiscal performance reflects both strategic foresight and operational resilience. Despite inherent challenges of our operational and economic environment, we have improved the productivity and the financial performance of this great company,” Ajiya stated.
Ajiya added that posting such impressive returns demonstrates NNPC Ltd’s commitment to sustaining profitability and supporting the attainment of national energy security as stipulated by the Petroleum Industry Act (PIA) 2021, and by extension, as expected by the Company’s shareholders.
Explaining that the NNPC Ltd will announce Initial Public offer (IPO) once the shareholders and Board make a decision, Ajiya also debunked claims on subsidy payment, saying the Company was only taking care of the shortfall on PMS importation between it and the Federation.
Speaking earlier at the press conference, the Chairman of the NNPC Ltd Board, Chief Pius Akinyelure said that the excellent performance came as the fruit of the PIA 2021, the commitment of the Board, Management and staff of the company.
Akinyelure added that the shareholders of the company have since approved a final dividend of N2.1trn in line with PIA 2021 provisions.
In her remarks at the briefing, the Executive Vice President, Upstream, Mrs. Oritsemeyiwa Eyesan said with improvements witnessed as a result of the renewed vigour in the war against crude oil theft and pipeline vandalism, NNPC Ltd is targeting 2million barrels per day crude oil production by the the end of the year.
On the current fuel queues in parts of Lagos and the FCT, the Executive Vice President, Downstream, Mr. Dapo Segun appealed for understanding from Nigerians, saying that the the Company is working with relevant stakeholders to address the distribution, evacuation and logistics challenges.
It would be recalled that in 2021, NNPC declared profit in its operations for the first time. From a loss position of N803 billion in 2018, it reduced the loss further down to N1.7 billion in 2019.
However, in 2020, it posted its ‘first ever’ profit of N287 billion, then in 2021, it recorded a N674.1 billion profit and in 2022, the profit grew to N2.548, an unprecedented achievement in its financial performance. The N3.297 trillion profit declared for 2023 is the highest since the Company’s inception, 46 years ago.
The Central Bank of Nigeria (CBN) has directed deposit money banks in the country to start charging 0.5% cybersecurity levy on some transactions done by their customers.
The apex bank gave the directive in a circular dated May 6, 2024 and sent to all commercial, merchant, non-interest and payment service banks as well as mobile money operators and payment service providers.
“Following the enactment of the Cybercrime (Prohibition, Prevention, etc) (amendment) Act 2024 and pursuant to the provision of Section 44 (2) (a) of the Act, ‘a levy of 0.5% (0.005) equivalent to a half percent of all electronic transactions value by the business specified in the Second Schedule of the Act’, is to be remitted to the National Cybersecurity Fund (NCF), which shall be administered by the Office of the National Security Adviser (ONSA),” the circular partly read.
The apex bank said that the implementation of the levy would start two weeks from the date of the circular.
“The levy shall be applied at the point of electronic transfer origination, then deducted and remitted by the financial institution. The deducted amount shall be reflected in the customer’s account with the narration, ‘Cybersecurity Levy’. Deductions shall commence within two weeks from the date of this circular for all financial institutions and the monthly remittance of the levies collected in bulk to the NCF account domiciled at the CBN by the fifth business day of every subsequent month,” the circular said
The apex bank added that this new levy will not be applied on transactions such as loan disbursements and repayments, salary payments, intra-account transfers within the same bank or between different banks for the same customer, intra-bank transfers between customers of the same bank.
Also exempted from the levy were inter-branch transfers within a bank, cheque clearing and settlements, Letters of Credits, Banks’ recapitalisation-related funding only bulk funds movement from collection accounts, savings and deposits including transactions involving long-term investments, among others.
This current implementation however is not sitting well with some netizens as they reacted to the new development.
Here were some of their reactions from X.
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