The Federal Government of Nigeria (FGN) concluded the negotiation of Double Taxation Agreements (the DTAs) with the Republic of Ghana and the Republic of Cameroon on 26 July 2018 and 3 August 2018, respectively.
While this is a welcomed development, it is expected that efforts will now be directed towards ensuring that the National Assembly ratifies the DTAs timely, in line with the provisions of Section 12(1) of the Nigerian Constitution. The DTAs would not have the force of law until they are enacted by the National Assembly.
Though the FGN is yet to make the concluded DTAs publicly available, we expect the DTAs to contain provisions similar to those in the DTAs between Nigeria and other countries, which are already in force. It is also expected that the DTAs would incorporate relevant provisions of the ‘Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting’ (MLI), to which Nigeria is a signatory. The MLI seeks to limit the opportunity for tax avoidance or possible treaty abuse by multinational enterprises.
Some of the potential benefits of the concluded DTAs when they come into force, particularly from a Nigerian perspective, are:
- Enhancement of job creation and opportunities as a result of increased investment
- Stronger trade ties between Nigeria and the treaty partners/countries
- Prevention of double taxation and tax avoidance on income and capital benefits
- Relatively more predictable tax regime which would attract foreign investors
We await further developments in this regard and will update you as more information become available.