Effect of Base Erosion and Profit Shifting on Revenue Generation in Nigeria

Abstract

This study examined the effect of Base Erosion and Profit Shifting BEPS) on revenue generation in Nigeria. This study employed ex-post facto research design and data were sourced from the CBN Statistical Bulletin of 2017, Security and Exchange Commission (SEC) annual bulletin and the Federal Inland Revenue Services (FIRS) annual reports. Quarterly data were gathered on tax revenue and Gross Domestic Product of Nigeria from 2013-2017. Specifically, data collected on tax revenue were divided into PRE-BEPS (from the third quarter of 2013 to the third quarter of 2015) and POST-BEPS (from the fourth quarter of 2015 to the fourth quarter of 2017). The study covers nine quarters before the introduction of BEPS and nine quarters after the introduction of the BEPS. Data gathered were analyzed via mean, standard deviation, paired t-test and simple linear regression. The findings revealed that there was a positive significant difference between tax revenue generated before and after the introduction of Basic Erosion Profit Sharing (BEPS) in Nigeria to the tune of 0.033 and that ax revenue exerts a significant positive effect on Nigeria's economy to the tune of 10.9030 (p=0.0001<0.05). It was established that BEPS can improve tax revenue in Nigeria. Thus, it was recommended that multinationals and other firms should willingly comply with regulations on tax revenue and transfer pricing. This might increase the revenue pool of the Nigerian government needed for the desired level of growth and development.