ESG Reporting – The Implications of Pillar II International Tax Reforms

An important discussion on the International Sustainability Standards and the game-changing dynamics they bring. The question we pose today is: How prepared is your organization for this transformative shift? 

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This published article discusses some developments around the Data Privacy in Nigeria and also highlighted relevant obligations for businesses in the coming months. 

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This article provides insight into the effects of the economic issues and how they impact family businesses while offering guidelines to navigate the uncertain future and protect the Family's accumulated wealth.

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This article examines the proposed taxation of foreign exchange transactions in the parallel market and its implications on the economy and taxpayers. 

Parallel foreign exchange markets or “black market” as it is popularly called, has been in existence for a while now and has become a common phenomenon in most developing countries.  In Nigeria, the market has grown in to become a major and ready source of foreign exchange to most individuals, corporate bodies and to some other participants in the economy. The implication of this is that as the parallel market for foreign exchange expands and the majority depend more on it for their transactions, the government loses control over the foreign exchange market as more of the official transactions are diverted to the parallel market. 

To curtail this overbearing reach of the activities of the parallel market and its impact on the Nigerian economy, the Presidential Committee on Fiscal Policy and Tax Reforms proposed imposing excise taxes on foreign exchange transactions conducted outside the official exchange market.

The major reasons why the Presidential Committee seeks to impose an excise tax on foreign exchange transactions in the parallel Market is the additional revenue the initiative would generate for the government, if implemented particularly as the transactions carried out daily in the Market are voluminous. Imposing an excise tax on these transactions could open a new stream of income for the government to fund its increasing costs. 

The recommendation proposed by the Presidential Committee aims at controlling the adverse exchange rate fluctuation currently bedeviling the Nigerian economy, unifying the official and parallel market rates in the long run, and proffering additional streams of revenue for the government. In achieving the desired objectives, policymakers must weigh the impact of the proposed recommendation on taxpayers both in the short term and long term before implementing the policy. This is to ensure that taxpayers (individuals and businesses) are not overburdened.

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This article discusses the concept of Global Minimum Top-up Tax as a key Tax Transparency Driver for ESG Reporting. The Global Minimum Top-up Tax is an International Tax Reform under the Pillar II Tax mechanism that aims at ensuring a fairer and even distribution of taxable profits across jurisdictions that multinationals operate in. It is also an assessment that qualifying Multinationals would have to undergo and these are classified under 3 dynamic assessments The What, The Who and The How.

The What: This is a reform that test to see if the group of subsidiaries for a multinational corporation have paid a minimum of 15% on the income realized from the particular jurisdiction they operate in.

The Who: Every large multinational group of companies that have a consolidated revenue balance of €750 million or more in at least two of the last four financial years of reporting would need to be assessed for a possible minimum top-up tax payments.

The How: For all qualifying multinationals that are within the aforementioned threshold, and that would be subjected to the assessment, the average of the effective tax rate of all the subsidiaries within the group would computed and if less than 15%, the shortfall would be netted off against the 15% benchmark and the resulting difference which is termed the Top-up rate to be charged against the group.

This assessment enhances what is referred to as Tax Transparency, which is a key sustainability metrics under the Governance pillar of ESG Reporting that Capital market finance providers, Government authorities and other relevant stakeholders look out for.

In conclusion, with the wave of sustainability reporting taking center stage this year, and the effects of the Pillar Two International Tax Reform coming into full-fledged disclosures this year as well, there is no better time for large multinationals to strategically position their business as a Tax transparent and compliant entity which enhances their ESG story, by undergoing the minimum top-up tax tests.

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In recent times, the Intellectual Property space in Nigeria has witnessed a number of developments that are critical to note. In this Article, we have discussed some of these developments and highlighted the impact on creatives, IP rights owners and other stakeholders.

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This published article focuses on the potential tax implication of some of these policies and the strategies that businesses have adopted in ensuring survival during this very challenging phase. More specifically, it highlights the intricacies of the free-floating exchange rate policy vis-à-vis its current and potential future tax implications, treatments, and compliance matters.

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This publishes article discusses on how ESG practices are becoming more and more crucial for businesses and organizations. ESG practices can aid companies in lowering risks, enhancing their image, and luring in new clients. 

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This published article provides highlights on the Personal Income Tax (PIT) obligations for Non-Resident Employers of Labour in Nigeria as it pertains to their Nigerian employees. Our discussions herein are limited to NREs that do not require any form of business registration in Nigeria.

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 This published article explores the ways in which technology is transforming businesses and facilitating efficiency in accounting procedures, as well as the benefits it brings to the accounting profession.

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