Ican 2025 Advanced Taxation Question 6

The use of unethical business strategies by some major multinational companies in reducing or evading taxes in their countries of residence, especially in the developing countries (such as Nigeria), are well documented. From available data and evidence in Nigeria, the use of transfer pricing practices, which are considered to pose major risk to the direct tax base, is found to be the most significant strategy being used to short-change the government in revenue generation. Of recent, many of these multinational companies have shifted their focus by operating in tax haven environments. Although, governments in some developed countries have come up with various legislative mechanisms to mitigate this act, this cannot be said of governments in developing countries. At a recent event held to discuss strategies to improve tax revenue, some tax experts have suggested strengthening the transfer pricing regulations and possible adoption of strategies employed by developed countries in mitigating the effect of tax sheltering potential of tax havens.