FG Set to Construct Port in Badagry, Laments Loss of $1trillion to Tax Evasion
The Federal Government, on Wednesday, approved the construction of a bigger seaport in Badagry, in Lagos State even as it tightens the noose on multinationals doing businesses in Nigeria.
It also approved an agreement to compel all multinationals operating in Nigeria to file accounts on their operations in other countries so as to enable the Nigerian tax authorities determine that such multinationals are not hiding taxable incomes from Nigeria.
Minister for Information and Culture, Lai Mohammed, who disclosed this at the end of the Federal Executive Council meeting held in Abuja yesterday said the project would be built by the private sector.
Minister for Power, Housing and Works, Babatunde Fashola and Minister for Transport, Rotimi Amaechi were also at the briefing with Lai Mohammed.
Mohammad said that two memoranda were approved by FEC. The first, he said was the Multilateral Competent Authority Agreement on the exchange of country by country report.
This, he said, would enable government to stop tax evasion and avoidance by multinationals.
He said: "In respect of the first memo, which is the memo for Multilateral Competent Agreement and the exchange of country by country report, the whole essence is to give the government a better grip on its tax laws and also to prevent tax evasions and avoidance by multinational companies.
"Where multinational companies operate in more than one countries, it is quite easy for them to move profit from one territory to another territory where the tax law is very favourable to them and what has happened over the years is that the revenue authorities have lost a lot of money.
"As at the last count over $ 1trillion has been lost over a period of time and the revenue authorities have found that they were losing more money in terms of tax evasion and avoidance than what they were even receiving as grants from multinational agencies.
"So this is a law that provides that if a company like MTN or Nestle for instance, is operating in Nigeria, not only must it file returns on its activities in Nigeria, it must also file returns on its activities in every other country that it is doing business so that you can see from there whether there is any attempt to hide figures.
"Apart from shoring up our finances, I think it is part of the fight against corruption and it also enhances transparency."
Also speaking on the agreement, Fashola said: "The Multinational Competence Authority Agreement is consistent with the macroeconomic policy of government; to fund its operation and economy with more tax income as the prices of commodities especially oil become more threatened.
"It would allow government to see really how much taxable revenues it has access to especially from companies. It is for transparency and accountability on the private side of the economy because transparency and accountability has been focused perhaps a little more on the public side of our national life.
When you look at the throughput that is coming from the earnings of the private sector, beaming the ray of transparency and accountability on revenues that should come into the public space and be used for national development only helps to strength the economy in the long run and bringing probity across board," he said.
The Information Minister said the second approval granted by FEC was for the outline business case for development of greenfield port facilities at Badagry, Lagos state.
According to him, this basically is the first step to approving the establishment of a new sea port in Badagry area.
He said: "What is important to us in the approval is that it shows that despite all the challenges that Nigeria is facing, Nigeria still a very preferred investment destination." Speaking on the approval to build the seaport, Fashola said the Badagry port was long overdue.
According to him, the nation's ports are behind in terms of technology in the maritime industry.
He said: "There are bigger vessels now being built across the world that require larger depths and drafts berth. Now some of our competitors on the continent like Djibouti are building bigger ports, so if we don't build this port we risk becoming uncompetitive and we risk a threat to our maritime hub status in the sense that we may become a transshipment port instead of a port of original destination."
He said the work started back in 2012 and it was interesting that all of the financing would be coming from the private sector.
"Again that is consistent with what this government stands for in terms of allowing private capital and competency to come into the development of our infrastructure. It was delayed because of the refusal of the last administration to grant approval for it because port development was under federal government control.
Also speaking, the transport minister, Ameachi said government expected the concessional agreement on the port to take five years to construct.
He said: "In this period when we are looking for foreign exchange it is going to bring a total of $2.558billion into the system and the federal and the Lagos state government would not contribute financially other than the land given by the Lagos state government."