Economy
What Nigeria’s Signing of OECD’s Multilateral Instrument Means for Taxpayers
By Seun Adu and Olanrewaju Alabi
Consider this puzzle. It takes 5 machines 5 minutes to manufacture 5 widgets. How many minutes will it take 100 machines to manufacture 100 widgets? If you answered this in a hurry, you probably said 100. This is wrong. The correct answer is 5. But what does this have to do with the Multilateral Instrument (MLI)? I will come back to this in a bit.
When the international community agreed there was a need to fix the international tax rules through the BEPS project, one of the problems they had to address was how to ensure that the recommendations from the project could be quickly implemented by everyone that was involved.
Implementing the BEPS recommendations would require countries to make several changes to (a) their local tax legislation; and (b) the avoidance of double taxation agreements (DTA) that they had with other countries. Making changes to DTAs was clearly the more challenging issue because of the time and resources required to do so.
Participants in the BEPS project realized that if the old way of updating DTAs was used to implement the BEPS actions, it would take many years before the BEPS recommendations would become fully effective in most countries. This would defeat the purpose of the project.
The Multilateral Instrument (MLI) was developed to deal with this challenge.
What is the MLI?
In its full form, it is called the OECD’s Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (Multilateral Instrument or MLI). The MLI is a single agreement between many countries. It allows a country to make concurrent changes to all or some of the DTAs that it has with other countries.
Quick overview of DTAs
Countries that do a lot of trade with one another usually sign agreements for the avoidance of double taxation to ensure that tax, in particular double taxation, does not become an obstacle to their trade activities. DTAs help to reduce the incidence of double taxation in several ways including: specifying which country has a right to tax a certain type of income, providing for reduced taxes on certain categories of income, etc.
DTAs usually follow a standard template or model. The two most used models are the OECD and UN models developed by the OECD and UN respectively. These models were first developed in the 1920s and are updated from time-to-time to deal with new tax issues.
Whenever a model is updated to address a particular tax issue, countries that follow the model try to make the changes to each of their DTAs to ensure that they can also address the issue.
Updating DTAs is not easy
The process of negotiating DTAs and ratifying them into law is usually long and difficult. Even after an agreement has been reached, it can still take many years before it takes full effect. For instance, the DTA between Nigeria and South Africa only came into force in 2008 even though the original agreement was signed in April 2000.
Negotiations for updating DTAs would typically not take as long as the negotiations for new agreements, but they still take a lot of time and resources. As a result of this, many countries do not update their DTAs as often as they should. This means that many DTAs are outdated.
For the BEPS project to be successful it was necessary to overcome this challenge since implementing the recommendations would require each country to update all of its DTAs. If countries followed the old way of having one-on-one negotiations with their existing treaty partners it would take many years for all the negotiations to be concluded and many more years for the agreements to be ratified by each country.
Such a delay would defeat the whole purpose of the BEPS project.
How the MLI solves the problem
The MLI removes the need for treaty partners to renegotiate the terms of existing DTAs one after the other making it possible to update the provisions of several double tax treaties with the relevant BEPS updates at the same time. It also makes it possible to pursue the domestication of the changes to all the treaties at once.
This is possible because the changes to be adopted through the MLI were based on collective negotiations between the countries that developed the instrument.
Some of the treaty changes are compulsory (these are the minimum standards) for all parties to the MLI while others are optional. Both the compulsory and optional changes have been standardized. The good thing about this is that the areas that will require one-on-one negotiations are not so many and these negotiations will be limited to choosing between several standardized options.
The process requires each country to submit an MLI position to the OECD. The MLI position is a document that contains details of the changes (based on the provisions of the MLI) that a particular country would like to make to each of its DTAs. This is then compared to the MLI positions of its other treaty partners.
Where the MLI positions of the parties to a particular treaty are the same, it means that an agreement has been reached on the specific provisions that match. The parties can then engage each other to discuss and agree on any positions that are different.
The effect is that a country can potentially renegotiate and ratify many of its tax treaties in almost the same time that it would normally have taken to re-negotiate one agreement. If I go back to my earlier puzzle for a second, the reason it takes only 5 minutes for the 100 machines to manufacture the 100 widgets is because they work simultaneously. This is pretty much how the MLI works.
What has Nigeria done so far?
Nigeria signed the MLI on 17 August 2017. Nigeria has also submitted its MLI position. This means that it is already possible to tell the changes that Nigeria plans to make to all of its existing double tax treaties.
In its MLI position, Nigeria listed DTAs with 19 treaty partners for amendment. These include the agreements that are already in force and those that are not yet in force (e.g. DTAs with Korea, Mauritius, United Arab Emirates etc.)
Also, of the 19 agreements, 13 treaty partners (including Belgium, Canada, China, Netherlands, and the United Kingdom) have all listed their DTAs with Nigeria for amendment under the MLI. This means that one can already check what treaty positions match and tell the changes that will likely be made to these DTAs.
The next steps will be for Nigeria and its treaty partners to agree on any parts of their proposals that do not match. Subsequent to this, each partner will then need to undertake the local domestication process to ensure that the changes become law. All of this could happen a lot quicker than we are used to.
Final thoughts
These are some of the changes that taxpayers need to be aware of due to the potential implications for their tax affairs. One of the changes is the introduction of the Principal Purpose Test (PPT) for tackling treaty shopping. Another important one is the amendments to the definition of Permanent Establishments in the treaties.
Nigerian resident taxpayers who currently enjoy treaty benefits should consider how the MLI will affect them. In addition, companies who plan to set up new structures that will allow them get treaty benefits will need to be mindful that the MLI could reduce the effectiveness of those structures.
Although the MLI position submitted by Nigeria on August 17 is provisional and subject to change, there is already a lot that one can deduce about how taxpayers will be impacted when the proposals finally become law.
Seun Adu is an Associate Director and Transfer Pricing Leader at PwC Nigeria. He is a regular writer and public speaker on tax and transfer pricing matters.
Olanrewaju Alabi is a Senior Associate with PwC Nigeria’s Transfer Pricing practice.
By Modupe Gbadeyanka
Companies operating in Lagos State have been reminded of their obligations to file their annual tax returns for the 2025 financial year on or before January 31, 2026.
This reminder was given by the Lagos State Internal Revenue Service (LIRS) in a statement made available to Business Post on Thursday.
In the notice signed by the chairman of the tax agency, Mr Ayodele Subair, it was stressed that filing the tax returns is an obligation as stipulated in the Nigeria Tax Administration Act (NTAA) 2025.
He explained that employers are required to file detailed returns on emoluments and compensation paid to their employees, as well as payments made to their service providers, vendors and consultants, and to ensure that all applicable taxes due for the year 2025 are fully remitted.
Mr Subair emphasised that filing of annual returns is a mandatory legal obligation, and warned that failure to comply will result in statutory sanctions, including administrative penalties, as prescribed under the new tax law.
According to Section 14 of the NTAA, employers are required to file detailed annual returns of all emoluments paid to employees, including taxes deducted and remitted to relevant tax authorities. Such returns must be filed and submitted not later than January 31 each year.
“Employers must prioritise the timely filing of their annual income tax returns. Compliance should be part of our everyday business practice.
“Early and accurate filing not only ensures adherence to the law as required by the Nigerian Constitution, but also supports effective revenue tracking, which is important to Lagos State’s fiscal planning and sustainability,” he noted.
The LIRS chief disclosed that electronic filing via the organisation’s eTax platform remains the only approved and acceptable mode of filing, as manual submissions have been completely phased out. This measure, he said, is aimed at simplifying and standardising tax administration processes in the state.
Employers are therefore required to submit their annual tax returns exclusively through the LIRS eTax portal: https://etax.lirs.net.
Dr Subair described the channel as secure, user-friendly, accessible 24/7, and designed to provide employers with a convenient and efficient means of fulfilling their tax obligations, advising firms to ensure that the tax identification number (Tax ID) of all employees is correctly captured in their filings, noting that employees without a Tax ID must generate one promptly to avoid disruptions during the filing process.
Africa’s business environment is undergoing a quiet but significant transformation. Over the past few years, investor confidence in African-focused digital companies has grown steadily, driven by stronger business fundamentals, improved technology infrastructure, and a deeper understanding of local markets. What was once viewed as a high-risk frontier is increasingly seen as a long-term growth opportunity with scalable returns.
This shift is evident in the types of startups attracting capital today. Investors are backing platforms that combine technology, recurring revenue models, and cross-border appeal—signaling a new phase in how digital businesses are built and funded across the continent.
The Evolution of Venture Capital in Africa
Early venture capital activity in Africa was largely experimental. Funding rounds were modest, timelines were short, and expectations focused on proof of concept rather than long-term scale. Today, the narrative has changed. Investors are deploying larger checks and looking beyond survival metrics toward sustainable growth, operational efficiency, and regional expansion.
Digital-first companies are particularly attractive because they can scale without heavy physical infrastructure. With mobile penetration rising and digital payments becoming more common, African startups now have access to broader audiences than ever before. This scalability has become a key selling point for investors seeking exposure to emerging markets without excessive operational complexity.
Why Digital Platforms Are Drawing Increased Attention
One notable trend is growing investment interest in digital entertainment and online platforms. These businesses benefit from high engagement, repeat usage, and diverse monetization opportunities. Unlike traditional industries, digital platforms can adapt quickly to consumer behavior and expand into new markets with relatively low marginal cost.
Recent investment activity reflects this shift. A clear example is the funding momentum around winna casino, which highlights how investors are backing tech-enabled platforms positioned for global reach rather than local limitation.
The significance of such deals goes beyond the individual company. They point to a broader willingness by investors to support African-linked digital businesses operating at the intersection of technology, finance, and entertainment.
Technology as a Driver of Business Scalability
Technology is no longer just an enabler—it is the core value proposition. Businesses that leverage automation, cloud infrastructure, and data-driven decision-making are better positioned to scale efficiently. This is particularly relevant in Africa, where legacy systems can slow down traditional business models.
Digital platforms reduce friction by offering faster transactions, better user experiences, and real-time insights. From an investor’s perspective, these efficiencies translate into lower operating risk and higher growth potential. Companies that build with scalability in mind from day one are more likely to secure follow-on funding and strategic partnerships.
Africa’s Changing Perception Among Global Investors
Global investors are increasingly reassessing Africa’s role in their portfolios. Rather than viewing the continent solely through the lens of risk, many now see demographic advantage, underpenetrated markets, and long-term consumer growth.
A growing body of international business analysis supports this outlook. Forbes, for instance, has highlighted why global investors are paying closer attention to African tech and digital businesses as part of broader emerging market strategies:
This change in perception is critical. It influences not only the volume of capital flowing into Africa but also the quality—bringing in investors with longer horizons, stronger networks, and deeper operational expertise.
The Importance of Governance and Trust
Despite the optimism, capital is not deployed blindly. Investors remain highly selective, particularly when it comes to governance, compliance, and transparency. Digital businesses operating in regulated or semi-regulated spaces are expected to demonstrate strong internal controls and responsible growth strategies.
For African startups, this means that trust has become a competitive advantage. Companies that invest early in governance structures, risk management, and user protection are better positioned to attract serious institutional capital. In the long term, this focus strengthens the overall business ecosystem.
What This Means for African Entrepreneurs
For founders, the evolving investment climate presents both opportunity and responsibility. Access to capital can accelerate growth, but it also raises expectations around execution, reporting, and accountability. Investors now expect African startups to operate at global standards while maintaining local relevance.
This environment rewards entrepreneurs who think beyond short-term gains and focus on building resilient, scalable businesses. Those who can balance innovation with discipline are more likely to thrive in an increasingly competitive funding landscape.
Looking Ahead
Africa’s digital economy is entering a more mature phase. Venture capital is no longer just fueling ideas—it is shaping business models, governance practices, and long-term strategies. As investor confidence continues to grow, digital platforms that demonstrate scalability, trust, and clear value propositions will define the next chapter of Africa’s business story.
For business leaders, policymakers, and investors alike, one thing is clear: Africa’s digital transformation is not a future promise—it is already underway, and capital is following conviction.
By Adedapo Adesanya
The Dangote Petroleum Refinery has called for the expansion of the federal government’s Naira-for-Crude policy, describing this initiative as a strong indication of support for domestic refining.
The newly appointed Managing Director of the oil facility, Mr David Bird, made this call during a press briefing at the refinery complex in Lagos, noting that the scheme has significantly contributed to stabilising the the local currency and should be expanded in Nigeria’s overall economic interest.
“I think it’s a great testimony to the level of government support that we get,” he said on Wednesday.
According to Mr Bird, between 30 and 40 per cent of the refinery’s current crude feedstock is sourced under the Naira-for-Crude arrangement, with ongoing monthly engagements between the refinery and the Nigerian National Petroleum Company (NNPC) Limited to determine suitable crude grades.
“Let’s say between 30 and 40 per cent of our current crude diet is on the crude-for-naira programme. We engage with NNPC monthly on the grades to buy because there is a lot of variability in the Nigerian crude grades.
“So, we have a preference, we have a wish list, and we continue to work with government support to ensure we get the right allocations,” he explained.
Mr Bird noted that while the refinery is optimised for Nigerian crude, supply volumes fluctuate.
He said approximately 30 per cent of crude supply is obtained through the Naira-for-Crude programme, another 30 per cent from Nigerian crudes purchased on the spot market, while the remaining 40 per cent comes from international grades, adding that even at that, the refinery would welcome an expansion of the policy.
“We would always like to enhance the crude-for-naira programme. Even at that level, five cargoes a month, for example, it has contributed to the stabilisation of the naira enormously,” Bird said, in response to a question.
Mr Bird added that the refinery has the capacity to absorb additional crude volumes if allocations are increased, noting that continued engagement with NNPC and the federal government is ongoing.
“We would have the potential to take further grades if and when, and we continue to engage with NNPC and the government on further increasing that,” he said, pointing to global geopolitical uncertainties as a reason Nigeria should prioritise domestic crude supply.
“It is in the country’s interest to supply domestically, because geopolitically it’s a very volatile situation. If Venezuelan crude comes back on the market, for example, it is in Nigeria’s interest to secure an offtaker through domestic refining,” he said.
The Naira-for-Crude policy, which began in October 2024, allows local refineries to purchase crude oil from NNPC in Naira instead of US Dollars. This approach reduces pressure on foreign exchange, lowers transaction costs, stabilises the local currency, and strengthens domestic refining capacity.
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