Nigeria Could Gain $2.5bn Annually Under Proposed UN Tax Rules

Nigeria could gain an additional $2.5 billion annually in corporate tax revenue if proposed United Nations rules for taxing multinational companies are adopted.

A new report by the Tax Justice Network says the reforms could allow countries worldwide to collect about $500 billion more each year without increasing corporate tax rates.

The proposed system would replace the long-standing approach of taxing multinational profits based largely on where companies declare them with a model that taxes profits where real economic activity takes place.

Under the new approach, multinational companies would be taxed according to where they employ workers, produce goods and services, and make sales.

The report argues that this would reduce the incentive for companies to shift profits to tax havens, where they may have little or no real business activity.

For Nigeria, the report estimates that the change could increase corporate tax revenue from multinationals by about 641 per cent, generating an additional $2.5 billion annually.

The proposed framework is being discussed under the United Nations Framework Convention on International Tax Cooperation, with negotiations taking place at the UN headquarters in New York.

The UN is aiming for agreement on the new tax approach by late 2027.

Supporters of the reform say it could significantly improve revenue mobilisation in developing countries, particularly in Africa, by ensuring multinational companies pay tax in countries where they actually conduct business.