Taxes: Nigeria, Africa Lose $80bn Annually
- As global bodies move against IFF in Africa
BY EDMOND ODOK, ABUJA – Nigeria currently accounts for a large percentage of the over $80 billion lost annually by African countries through Illicit Financial Flows (IFF), Minister of Finance, Mrs Kemi Adeosun has said.
This is just as Nigeria and some global organisations, including the Organisation for Economic Cooperation and Development (OECD) and the World Bank Group, have endorsed high-level partnership with other African countries to check IFF in the continent.
She said developing countries, including Nigeria, are faced with significantly lower levels of tax, as a percentage of Gross Domestic Product (GDP), than wealthier States because the income and wealth created are dubiously taken out of the country without being taxed.
Adeosn, who cited former South African President Thabo Mbeki’s High-Level Panel report on IFFs, said “The IFFs are driven by the desire to hide illicit wealth, hide the proceeds away from the public eye and law enforcement agencies and also conceal the ways and means by which illicit wealth was created. This makes it difficult to trace the associated money flow.”
Speaking at the ongoing Platform for Collaboration on Tax (PCT) Conference at the United Nations in New York, Mrs Adeosun noted that IFF is a problem that urgently requires global focus and actions towards the realisation of significant developmental progress for Nigeria and other developing countries.
According to her, Nigeria’s efforts at tackling IFFs must include tightening its tax codes and tax laws that encourage tax avoidance as well as strengthening of the tax system to make it more efficient.
She also advocated more responsibility on the part of destination countries of IFF, adding that beneficial ownership registers should be established to allow authorities track money in financial investigations involving suspect accounts and assets held by corporate vehicles.
Additionally, the Minister said safe havens that provide incentives for transfer of stolen assets and IFF abroad must be eliminated, while efforts should be geared towards developing a supportive, efficient and speedy process for returning assets to originating countries.
Adeosun disclosed that the Federal Government had engaged a leading international Asset Tracing and Investigation Agency (Kroll), to trace and track illicit flows and assets, adding that also on the table is the Multilateral Competent Authority on Common Reporting Standards that promote exchange of financial account information.
Explaining that the country would upshot the first exchange in 2019 when the domestic legal framework is completed, the Minister said, “Nigeria has adopted the Common Reporting Standards and the Addis Tax initiative aimed at improving the fairness, transparency, efficiency and effectiveness of the tax system.
“Furthermore, as part of open government partnership Nigeria has included in the national action plan a commitment to establish a public register of beneficial owners. To this end, the Corporate Affairs Commission, the custodian of Nigeria’s company registry, is pursuing relevant amendments to the Companies and Allied Matters Act to comply with global standards.”
In her remarks, Head of OECD Global Forum on Exchange of Information, Ms Monica Bhatia applauded the high-level partnership to check IFF in the continent reached as a key resolution at the PCT Conference, stating that automatic information sharing has been adopted as part of proactive steps to curtail the IFFs from Africa to developed countries.
Bhatia said; “The Sustainable Development Goals (SDGs) specifically says that we must significantly reduce illicit financial flows by the year 2030. A lot of efforts are ongoing to achieve this and support developing countries to end the IFFs.”
The PCT Conference is a collaborative initiative of the Organisation for Economic Cooperation and Development (OECD), The World Bank Group, International Monetary Fund (IMF) and The United Nations.