Nigeria’s federal government on Wednesday signed an agreement with Singapore that would help companies operating in the two countries avoid double taxation in their different bases.
The agreement clearly spells out taxing rights of the two countries in respect of different incomes derived from each country.
It will specifically assist prospective investors know their income tax obligation in the other country as well as available tax incentives; and equally spells out clearly tax jurisdiction of each country in respect of all possible areas of business activities which give rise to taxation.
The negotiation of the Avoidance of Double Taxation Agreement between Nigeria and Singapore was held in Singapore in October 2013 and later concluded in October 2014, after resolving all the outstanding issues.
Nigeria’s Federal Executive Council (FEC) approved the text of the agreement in November 2016, authorizing Kemi Adeosun, Minister of Finance to sign the agreement on behalf of Nigeria.
“We are signing the agreement today so that our companies avoid double taxation in Singapore and vice versa,” Adeosun said at the brief signing event in her Abuja office, Wednesday evening.
Between 2011 and 2015, the volume of trade between the Nigeria and Singapore stood at N846 Billion, with the N222 Billion absolute Balance of Trade recorded in favour of Nigeria. The N42 Billion Balance of Trade net of Petroleum Export was, however, recorded in favour of Singapore.
According to figures from the finance ministry, the volume of Foreign Direct Investments (FDI) from Singapore to Nigeria between 2010 and March 2015 was reported at $908.8 million.
Possible areas of economic cooperation between Nigeria and Singapore include consumer electronics, information technology products, pharmaceuticals and medical technology products, and financial services, among others.
The agreement between the two countries will therefore, further facilitate inter-state trade, economic and business activities by ensuring that nationals or enterprises of the two states are not taxed twice on the income of profits derived from the other country.
In a note, the ministry stated that Singapore was identified as a suitable tax treaty partner for Nigeria because it is currently one of the fastest growing economies in the world with a highly developed and successful free-market economy.
“It operates in a remarkably open and transparent environment, with stable prices, and a per capita GDP higher than that of most developed Countries.”
Relations between Nigeria and Singapore have been on the increase since 2012, culminating in the first Nigeria-Singapore Business & Investment Forum in 2013.