Revisiting the nigerian tax treaty network and its impact on foreign direct investment
A country’s tax regime is always a key factor for any business considering moving into new markets. The major reason states sign tax treaties is so as to avoid international double taxation which usually arise as a result of cross-border trade and investment. For a capital importing or developing country like Nigeria, attracting Foreign Direct Investment (FDI) which will facilitate the transfer of technology and drive economic development and growth is good reason for entering into tax treaty negotiations and agreements with capital exporting or developed countries. Since independence, Nigeria has signed several tax treaties which created legally binding obligations between it and other countries. As a country blessed by God with abundant natural resources, Nigeria, ideally, is an investment haven for both local and foreign investors. Unfortunately, the inflow of Foreign Direct Investment (FDI) to the country is abysmally poor and low when compared to its potentials. More so, the Nigerian tax treaty network which is aimed at attracting Foreign Direct Investment (FDI) seems not only unsatisfactory and inadequate but has also constituted a hindrance to the inflow of investments into the country. This article evaluates the Nigerian tax treaty network and its impact on Foreign Direct Investment. The paper finds that many of the extant tax treaties tn Nigeria hae not been ratified and those ratified have not been domesticated as required by the Constitution and suggests that there is need for change in the status quo. It makes some recommendations which if followed could help Nigeria in realizing its objectives in entering into better tax treaty arrangements
Keywords: “Tax Treaty”, “Tax Treaty Network”, “Double Taxation”, “Foreign Direct Investment”.