Strong opposition to the ratification of the Nigeria-Mauritius Double Taxation Treaty



Tax money pays for education and healthcare. Right now, big foreign companies are avoiding paying millions of naira in tax, depriving ordinary people of these vital services. And it could be about to get worse.
Nigerian Finance Minister Ngozi Okonjo-Iweala is planning to make an agreement with Mauritius known as a “double taxation treaty”. Other countries who have made the same agreement with Mauritius have started to heavily criticise the terms, because they increase the opportunities for big foreign companies to dodge paying their taxes.

A letter to the Finance Minister of Nigeria to stop ratification of any tax treaty with Mauritius where Action Aid also calls for end. Minority Voice reproduces the letter.

Dear Hon Minister,

In August 2012, representatives of the governments of Mauritius and Nigeria (a team you were part of) signed an income tax treaty. Also signed was a Protocol for the treaty which agreements contain measures providing beneficial tax rates for dividends, interest, and royalties. It also provides for resident-based taxation of capital gains arising on sale of shares, and rules with respect to the taxation of permanent establishments. The treaty provisions which have been ratified by Mauritius government still await ratification by Nigeria. Once ratified by both countries, the treaty will enter into force.

However, ActionAid’s analysis has shown that the Double Taxation Treaty with Mauritius could have far-reaching negative implications for Nigeria’s development and resources if ratified.

ActionAid’s corporate exposes have revealed how Double Taxation Treaties creates loopholes for tax evasion and avoidance and is exploited by companies that undertake ‘treaty shopping’ which deny our beloved country of the much needed resources we need at this juncture for developing.

We invite you to take a look at the analysis of the Nigeria-Mauritius treaty here: http://www.actionaid.org/nigeria/publications/mauritius-nigeria-double-taxation-treaty). Overall, the cost (financial and otherwise) of the treaty to Nigeria will outweigh the perceived benefits. It is advisable for Nigeria not to ratify the treaty unless certain changes are made to retain Nigeria’s taxing rights as contained in the domestic tax legislation including the imposition of withholding tax on technical and management fees and other areas of the treaty that could undermine our tax revenue base.

Treaties with Mauritius have started to come under severe criticism by tax authorities of other countries for abuses by companies. Consequently, the government of South Africa successfully amended some key clauses in its Mauritius treaty only last year, and the government of Rwanda’s renegotiated its treaty to include a 10% withholding tax on dividends, royalty and interest, and 12% for management fees, compared to zero in the old treaty, a clear improvement.

The Honourable Minister herself has been calling on world leaders in different fora including in Bali and Bursan to take action towards stopping tax evasion, tax avoidance and other shameful practices that undermine the capacity of African countries in mobilising resources for development, such as health and education. it is therefore not out of place to call on you to take action to prevent the ratification of this treaty.

Beyond this critical national issue, Nigeria has an important role as the host of the 2014 Africa Finance Ministerial. The conference has been mandated by the AU Heads of State to come up with options for Domestic Resource Mobilisation and propose practical and productive measures that will boost the continent’s resources. The AU’s High Level Panel on Illicit Financial Flows, chaired by former South African President Thabo Mbeki, will also be providing a “progress report” on their work to you and other finance ministers. We urge you to show leadership with your colleagues by ensuring strong decisions are taken that make clear Africa’s demand for international reforms on tax breaks, tax treaties, and tax avoidance to fund Africa’s development and industrialisation.

In view of the above, I am urging you to;

– Stop the ratification of the Nigeria-Mauritius Double Taxation Treaty

This is an opportunity for you to put your words into action. I look forward to a favourable response from you

Posted by on May 7 2014. Filed under Actualités, Economie, Featured. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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