Nigeria and Ghana have signed an agreement to avoid double taxation between the two countries. The negotiation process ended on Thursday, July 26, 2018. The agreement will be signed later by the competent authorities of both countries. Another important factor is the granting of an exemption or tax at a reduced rate on certain revenues, such as interest, royalties, dividends, technical services and others, which are related to a transaction between the parties under the double taxation convention. Nigeria must strategically exploit its status as the world`s 26th largest economy and Africa`s largest economically, proactively using all potentials, promises and prospects on the continent and around the world through meaningful economic partnerships, enshrined in double taxation agreements. It is not uncommon for a company or individual established in one country to make a taxable profit (profits, profits) in another country. That person may find that he is required under national law to tax that profit on the spot and to pay it again in the country where the profit was made. Because this is unfair, many nations enter into bilateral double taxation treaties. In some cases, this requires that the tax be paid in the country of residence and exempt in the country where it is produced.
In other cases, the country where the profits are generated withdraws the withholding tax (“withholding tax”) and the taxpayer receives a compensatory foreign tax credit in the country of residence to reflect the fact that taxes have already been paid. To do this, the taxpayer (abroad) must declare himself a non-resident. A double taxation avoidance agreement allows in principle to deduct the tax paid in one of the two countries from the tax payable in the other and thus avoid double taxation. Meanwhile, it should be noted that Nigeria`s thirteen double taxation treaties are far from the number of other industrialized and developing countries. For this way, the United Kingdom currently has SDRs with 131 countries, Canada with 92 SDRs and Malaysia with 68 TDTs. Current statistics have shown that there is a positive correlation between DTT and the influx of foreign direct investment into Nigeria. As a result, and to accelerate Nigeria`s growth to become one of the 20 largest economies in the world, it is clear that Nigeria needs to expand its current DTT network. Mauritius and Nigeria have just signed a new convention to avoid double taxation. In Nigeria, the OECD model has served as the basis for the formulation of most of the current double taxation (DTT) treaties with other countries. .