FIRS, Development Partners Eye Tax Administration Efficiency

Fired up by exciting prospects of taxation as the new bride for revenue generation in Africa, this gathering extraordinaire was well attended by every stretch of imagination. With over 60 participants from 15 Member States of the Economic Community of West African States (ECOWAS) in attendance, COBHAM NSA reports that many key speakers at this all-important ‘peer review’ meeting gladly admitted the august audience was surprisingly quite impressive.

Graced by tax administrators and tax policy officials in their numbers, it was a meeting of sub-regional stakeholders and development partners with the broad theme, ‘Transfer Pricing In ECOWAS: Protecting the Tax base and building a strong investment climate across the Region’. For effect, this 3-day meeting featured representatives from Development partners such as the ECOWAS Commission, the European Union, West Africa Economic and Monetary Union (WAEMU), the World Bank Group, the Organisation for Economic Co-operation and Development (OECD), the Africa Tax Administration Forum (ATAF), and the West African Tax Administration Forum (WATAF) as well as members of the Fourth Estate of the Realm, the media. So, it was an elated ECOWAS Commissioner for Industry and Private Sector Promotion, Kalilou Traore that ably kicked off proceedings at the august conference stating that improved tax administration and pricing regime would position member countries to enhance their tax base and generate enough funds for development purposes. Traore said “The Economic Community of West African States is committed to implementing programs that facilitate regional integration and making it work for private sector operators and the people of West Africa,” The Commissioner, who was represented by Acting Director, Private Sector Dr Enobong Umoessien, also offered insight on the motivation behind the Forum’s set goal, saying, “We recognize that it is important to develop internationally shared transfer pricing principles for the region.” Traore’s inspiring words acted as the tonic for co-host and Executive Chairman of Federal Inland Revenue Service (FIRS), Mr Tunde Folwer to state that volatility in global oil price, among other economic variables, makes it imperative for ECOWAS member countries to embrace proficient tax administration as a viable option to boost their revenue generation and grow annual earnings on a sustainable template. He endorsed growing understanding and acceptance of taxes as boosters of countries’ economic fortunes, adding that there must be urgency in handling issues of enhanced taxation within the sub-region to achieve the set objectives. Indeed, on this topical issue, experts agree Fowler should know better given his eminent office as triple Chairman in the continent’s tax sector. Aside his Executive Chairmanship of FIRS, he also doubles as the Chairman, Joint Tax Board (JTB) and Chairman, Africa Tax Administration Forum (ATAF). And in the triple Chair’s assessment, “Taxation is the only way to go with the crash in oil price. It’s clear that in Africa we cannot rely on oil to fund our budget. Taxation is important world over. Every nation has to rely on taxation to fund its budget. The issue of Transfer pricing is very key; a situation where some organisations continue to benefit and do not want to pay taxes is unacceptable.” “I think the job of tax administration is extremely very essential. Going forward is to get the private sector running effectively. The private sector provides employment on economics of scale. If private sector is doing well, the economy will do well. We have no choice but to keep pushing for effective taxation,” the FIRS boss said. Taking his submission further, Fowler stated thus: “We can’t rely on the sale of natural assets to fund budgets. Every nation has to rely on taxation to fund projects. It can help many nations. Tax of N5,000 can save the life of a child. No region can rely entirely on aids. It’s no longer about the political will. We need improved taxation for survival. Transfer pricing might be complex but very important when we get it right.” This exquisite delivery by the FIRS boss on taxation as the way out of economic quagmire and improved revenue earnings for nations presented one of the talking points for the participants. With generous thanks to member nations and Development partners for hosting the meeting in Nigeria, Mr Fowler amplified the nation’s determined plans to diversify the economy from the oil that currently accounts for 90 per cent of its revenue, noting that support for the private sector to thrive and drive the economy of countries would ensure healthier performance and inevitably place them on the desired path of growth and development. For the World Bank Group, co-hosting the forum demonstrates committed efforts at partnering the sub-region to harness its huge potential for competitiveness and increase investment flows. The Group’s Senior Governance Specialist, Roland Lomme lauded FIRS’ commitment to expand Nigeria’s financial space as well as ensure an improved investment climate. Acknowledging that transfer pricing poses a challenging agenda for governments and organizations within the sub-region, Lomme called for ‘tailored and pragmatic approach’ to handle the issue, noting that ‘reliable and proper data base’ is required urgently, especially given Nigeria’s move to develop the mining sector as a major alternative revenue earning source. The cheering news from the Group to the sub-region is its reassurances, “West Africa has enormous potential to strengthen their competitiveness and increase investment flows, which can drive growth, reduce poverty, and deliver jobs to the region. The World Bank Group is pleased to be working in partnership with regional organizations, member states, the private sector and development partners to help these countries unlock investment challenges along key trade corridors, and improve their competitiveness within the global economy.” Among other positives from the event is the European Union (EU) pledge of 7.7 million Euros in support of ECOWAS’ quest to entrench transfer pricing programme and enhanced tax administration. Head of Section – Economic Cooperation and Energy, Juan Casla, who dropped the hints, said EU was worried about tax efficiency administration within ECOWAS and challenged member-states to develop concrete measures that would strengthen tax administration efficiency in the sub-region. Representing Head of EU to Nigeria and ECOWAS, Ambassador, Michel Arrion at the event, Casla said, “The fact that the European Union is financing this project is testimony of the Commission’s committed to supporting developing countries to establish efficient, effective, fair and transparent tax systems, to implement international tax standards, and therefore to increase domestic revenue mobilization and tackle tax evasion, tax avoidance and illicit financial flows. Our support to improving investment conditions is a priority of the EU cooperation with West Africa in general and Nigeria in particular,” Speaking further, Casla said “An improved tax governance and transparency are paramount concern to EU. We signed two conventions in order to double the support of revenue across the country. That is to support tax efficiency and avoid illicit financial flow by collecting more and spend better.” She also said EU would lead by example to ensure success at implementing the support, adding that this would through implementing the concept at home in EU countries to combat fraudulent tax and tackling corporate tax avoidance, which is an area they have always supported the UN. In all, the programme’s relevance and necessity was succinctly captured by the Head, International Tax, Nigeria Federal Inland Revenue Authority (FIRS), Mathew Gbonjubola. In a statement available to the media, Gbonjubola summed up the disturbing situation thus: “Taxes from multinational companies constitute a substantial amount of tax revenue in West African countries. This regional workshop is an opportunity for Nigeria and other ECOWAS member states to collaborate on protecting their tax base with efficient transfer pricing regimes”, From the Forum’s documents, its objectives include creating a platform for ECOWAs countries to take stock of current state of transfer pricing in the region and determine the direction of further progress. Also, it seeks to address various investment policy issues that hamper efficient private sector’s investments across the region. Forefront learnt the transfer pricing component of the project is a World Bank initiative to support domestic resource mobilisation and help countries protect their corporate tax base from profit shifting. The program is an element of the Improved Business and Investment Climate in West Africa Project, a four-year initiative launched in November 2014. Funded by the European Union to the tune of 7.7 million Euros, it seeks to encourage ECOWAS’ efforts at improving investment policy in West Africa. Generally, the areas of support covered by the Project include: comprehensive reviews and recommendations on the transfer pricing rules of ECOWAS countries, including a detailed survey and report to be presented at the event; in-depth long-term support on transfer pricing policy, legislation and implementation to three ECOWAS countries: Liberia, Nigeria and Senegal (available to other ECOWAS countries from 2017); the development of tools to assist ECOWAS countries to increase their capacity on transfer pricing and related issues; and the identification of ways in which ECOWAS countries can mutually support each other in the development and implementation of transfer pricing rules. Among presentations at the summit were: “Significance of Transfer Pricing to West Africa – Global, Regional and Local Perspectives”; “Building Effective Transfer Pricing Regimes across the ECOWAS Region”; “Examining Potential Areas for a Regional Approach”; and “Transfer Pricing Comparables Across ECOWAS”.