Introduction
In the first quarter of 2019, Nigeria recorded an increase of
about 216% in foreign capital and investments when compared to the
previous quarter.1 For tax optimization, a number of
these investments are made via Holding Companies (HoldCos)
established in tax-friendly jurisdictions. Due to the structure of
Nigerian tax laws, Nigerian businesses also set up HoldCos in these
tax-friendly offshore jurisdictions to hold their assets and
investments in Nigeria.
In 2015, the Organisation for Economic Co-operation and
Development (OECD) introduced the Base Erosion and Profit Shifting
(BEPS) framework, which is aimed at tackling international tax
avoidance, among other things. Tax avoidance schemes are typically
facilitated through arrangements to shift profits from high
tax-paying jurisdictions to low tax-paying jurisdictions or tax
friendly jurisdictions.
