The Senate on Wednesday moved to address Nigeria’s revenue loss owing to money laundering, tax evasion by international oil companies operating in the country (IOCs), and other criminal activities involving illicit financial flows.
The decision to do so was reached in resolutions that were reached sequel to the consideration of motion on “the need to review the domestic legal framework against illicit financial flows and to consider the creation of a Tax Amnesty for the voluntary repatriation of funds to Nigeria.”
The upper chamber, accordingly, resolved to invite the Minister of Finance, Budget and National Planning, Zainab Ahmed, and the heads of the Federal Inland Revenue Service (FIRS), Economic and Financial Crimes Commission (EFCC), Central Bank of Nigeria (CBN), and Independent Corrupt Practices Commission (ICPC) to brief the Senate committees on finance, anti-corruption and financial crimes; banking, insurance and other financial institutions on measures being sought to curb revenue loss, tax evasion and money laundering activities.
Also to be invited are the heads of the Nigerian Financial Intelligence Unit (NFIU), the Nigerian Export-Import Bank (NEXIM), Nigerian National Petroleum Corporation (NNPC) among other relevant institutions.
The upper chamber called for an appraisal of the Federal Inland Revenue Service’s (FIRS) current framework for tracing, identifying, preventing and sanctioning cross-border tax evasion and other illicit financial outflows.
The Senate also mandated the committee to come up with a holistic legislative framework on how to repatriate lost revenue due to illicit financial flows, mitigate future unabated flows and provide an efficient strategy for the reinvestment of repatriated resources into the Nigerian economy.
Sponsor of the motion, Senator Gershom Bassey (PDP – Cross River South), in his presentation, while citing a 2014 Global Financial Integrity Report, said, “Nigeria lost a minimum of US$140 billion to illicit financial flows between 2000 and 2014, mainly to crude oil and commercial activities mis-pricing.
“This economic loss to the country was not abated, as Nigeria was ranked among the global top 30 countries of illicit financial outflows by dollar value, with US$8.3 billion in an illicit outflow from Nigeria in 2015.”
Bassey expressed worry with additional findings by the Tax Justice Network and International Monetary Fund, “that developing countries, including Nigeria, have lost over US$200 billion per year to illicit financial flows as multinational corporations neglect, fail and/or refuse to pay taxes in these countries where they generate substantial amounts of profit.”
Bassey added, “Nigeria loses approximately $15billion annually to offshore tax evasion. This has resulted in consistently low tax revenue as a percentage of Gross Domestic Product (GDP), as low as 5.7 per cent in 2017. Such statistics are alarming, especially when compared to the 17.2 percent average of 26 African countries in the same year.
“This incessant financial drain on the Nigerian economy continues to have negative implications for domestic resource mobilization and long-term economic growth and development.”
“IFFs continue to pose serious obstacles to development, as approximately five per cent of the IFFs from Africa can be attributed to corruption.
“These unrecorded and untaxed cross-border transfers could have been mobilized as part of government revenue and injected into Nigeria’s formal economy towards sustained development and economic growth.”
Bassey expressed concern that “statistics show that the amount of revenue lost annually by Nigeria was more than the sums provided as development aid.”