Nigeria Reconsidering Its Approach To Pillar Two

Nigeria has previously rejected both Pillars One and Two due to concerns over the loss of tax revenue in Nigeria.

It did not sign the October 2021 Statement and subsequently issued a public notice in May 2022 reiterating its rejection of both Pillars and outlining its approach to the taxation for foreign MNEs. 

The crux of the issue for Nigeria is that the thresholds for both Pillar One and Pillar Two are too high to bring MNEs within the scope of Nigerian taxes.

Instead they implemented domestic law changes in Finance Act 2019, Finance Act 2021 and the Companies Income Tax (Significant Economic Presence) Order, 2020 to deem foreign companies with a significant economic presence in Nigeria to derive Nigerian source income.

However, it now looks as though they are reconsidering their approach following an April 2023 workshop jointly organised by the OECD and the Federal Inland Revenue Service (FIRS), to discuss the Two-Pillar Solution for Nigeria.