The Federal Government of Nigerian on Wednesday announced that plans are underway to stop major companies from evading tax.
To achieve this, the Federal Executive Council granted permission to the Ministry of Finance to sign a multilateral convention to implement tax treaty related matters to prevent base erosion and profit shifting.
Base erosion and profit shifting is a situation where the profit that was made in Nigeria using accounting methods is shifted to a country that has little or no tax.
The decision to sign the convention was taken at a meeting of the council presided over by the Acting President, Yemi Osinbajo, at the Presidential Villa, Abuja.
The disclosure was made by the Minister of Finance, Kemi Adeosun, while speaking with State House correspondents after the meeting.
She said, “In simple language, this administration is very focused on revenue generation and mobilisation and part of that work is to improve our tax collection.
“One of the means by which major companies evade tax is a practice called base erosion and profit shifting which means that the profit that was made in Nigeria using accounting methods is shifted it to a country that has little or no tax.
“So really the country in which profit was generated doesn’t get tax, they go and declare those profits in a country that has very low tax.
“There is a contact among the G20 countries and the OECD to end this and Nigeria was part of those who negotiated this convention and today council gave us permission to go and sign the conventions.”