FIRS seeks to collaborate with International Firms and African countries to effectively tax tech companies

The Federal Inland Revenue Service (FIRS) is considering a collaboration between International stakeholders and African countries in a bid to find workable alternative rules that would “subject digital businesses and base eroding tax payments.”

The disclosure was made at the African Tax Administrators’ Forum (ATAF) Technical Assistance Program by the FIRS Executive Chairman, Muhammad Nami.

According to Nami, the potential cost of managing and enforcing the complicated rules will significantly outweigh the expected money generated by their implementation.

He said, “Our analysis continues to show that the possible cost of administering and implementing the complex rules will far outweigh the expected revenue accruing from its implementation. I, therefore, urge the African Tax Administrators Forum (ATAF) to join the discussion at the UN Tax Committee of Experts, South Centre.”

FIRS is looking to expand on other international standards for the taxation of multinational corporations, like tax treaties, transfer pricing rules and information exchange.

“The forum should also collaborate with all other well-meaning stakeholders to explore alternative rules that will enable African countries to effectively subject the digital businesses and base eroding payments to tax in our jurisdictions. These collaborations should extend to other rules developed and implemented at the international level for the taxation of multi-national enterprises, such as the tax treaty, exchange of information and transfer pricing rules,” he added.

The chairman stressed the importance of capacity building among members in the areas of taxation of the digital economy, profit sharing and base erosion by multinational firms.

He said, “This is instructive, considering the implementation challenges that developing jurisdictions will face due to the complexity of the Pillars I and II rules. It is crucial for the ATAF technical assistance to look toward improving the capacity of member-countries’ tax administration through the digitisation of operations.”

Nami urged ATAF to organise peer-to-peer knowledge sharing sessions between beneficiaries of the technical assistance programmes and intensify technical assistance on international tax rules, particularly in the areas of tax treaties, transfer pricing and exchange of information.