Taxation of Corporate Incomes with International Connections in Nigeria: Legal Issues Arising

Abstract

Corporate tax is of immense importance to national economies globally. It serves as an important source of government revenue and an indispensable armory for managing and directing national economies towards desired goals. Globalisation and advancements in technology have heralded an increased volume of trade and investment across national boundaries. Multinationals dominate this increased volume of international transactions in Africa while national corporations who are junior partners in the emerging global economy also do business abroad. Corporate income is therefore a fertile tax base for tax systems across the globe. The Nigerian tax system consequently subjects to tax global profits of a Nigerian company and profits or incomes of foreign companies that are derived from a source within Nigeria. This regime presents some practical legal problems for the tax system. Through the doctrinal research method, this paper has identified and discussed these emerging legal issues ranging from the problems of ascertainment of deductible expenses incurred abroad, international double taxation, transfer pricing abuse, and the non-enforceability of foreign tax laws and judgments abroad which tend to impact negatively on revenue generation. As a way forward, the paper finally suggests a selective signing of bilateral treaties in respect of double taxation agreements, and a multinational approach to serve as a check against the tendency of multinationals to default payment of taxes in their host countries.

Keywords: Taxation, Corporate, Incomes, International, Connections, Legal.

DOI: 10.7176/JLPG/98-22

Publication date:June 30th 2020