The Role of Multinational Companies in Tax Evasion and Tax Avoidance: The Case of Nigeria
No Thumbnail Available
Date
2011
Authors
Otusanya, O.J
Journal Title
Journal ISSN
Volume Title
Publisher
Abstract
Tax evasion and tax avoidance reduce government revenues. This has a significant
detrimental effect on the provision of infrastructures, public services and public utilities.
Multinational companies (MNCs) in the oil, gas, and manufacturing sectors have used
various tax schemes, ranging from off-shore intermediary companies to claiming recharges,
royalties or technical fees and under-reporting of profit, to avoid paying tax in Nigeria. This
paper locates the role of MNC tax practice within the broader dynamics of globalisation and
the pursuit of profits, to argue that the drive of MNCs for higher profits can enrich our
understanding of why some MNCs engage in tax evasion and avoidance at almost any cost.
Stimulated by profitability, and intense competition and pressure to increase earnings,
capitalist enterprises constantly seek new ways of boosting their earnings by developing
complex structures and novel ways of increasing their profits by exploiting ambiguities in the
law. The evidence shows that tax havens and offshore financial centres, shaped by
globalisation, are major structures facilitating the anti-social tax practices of MNCs. The
findings also suggest that the local business elite and local professionals are key actors in
facilitating these anti-social tax practices in Nigeria for their own financial gain. These MNC
practices also shift the tax burden to less mobile capital and less well-off citizens, and thereby
undermine the Nigerian social fabric. This paper therefore argues that tax reforms are needed
to reduce the problems created by MNCs and their affiliates operating in Nigeria.
Description
To access the full text of this article, kindly contact the University Librarian- Dr. Olukemi Fadehan via the administrators: Dr. Yetunde Zaid (yzaid@unilag.edu.ng) or Dr. Christopher Okiki (cokiki@unilag.edu.ng) of the University of Lagos Library.
Keywords
Tax evasion , Pursuit of profits , Tax havens , Tax avoidance
Citation
Otusanya, O.J (2011), The Role of Multinational Companies in Tax Evasion and Tax Avoidance: The Case of Nigeria. Journal of Critical Perspectives on Accounting, vol.22 (3)