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Profit shifting from Nigeria to Europe: The impact on human rights

Author

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  • Rachel Etter-Phoya
  • Stuart Murray
  • Stephen Hall
  • Michael Masiya
  • Bernadette O’Hare

Abstract

The United Nations Universal Declaration of Human Rights states that everyone is entitled to economic and social rights essential to survive and thrive (Articles 25 and 26) and everyone is entitled to a social and international order in which their rights and freedom can be realised (Article 28). These rights must be ensured through national efforts and international cooperation (Article 22), but many millions of people worldwide do not access their rights, including the right to clean drinking water, safe sanitation, healthcare, and education. Government revenue from taxes plays a crucial role in ensuring these rights. However, globally, 10% of corporate tax revenue is lost because multinational corporations shift their profits from where they operate. This study examines the impact of profit shifting on tax revenue in Nigeria, focussing on access to economic and social rights and governance. It estimates the impact of revenue gains made on profits shifted from Nigeria to European tax havens, using data on profits shifted published by Wier and Zucman in 2022 and the Government Revenue and Development Estimations (GRADE) model for the estimations. The findings reveal that if the Nigerian government had additional revenue equivalent to tax losses, an additional 500,000 Nigerians would have their right to drink clean water and nearly 800,000 their right to use basic sanitation each day, 150,000 children would have their right to education, and 11 children would have their right to survive each day (amounting to 4,063 children each year). Increased revenue would also improve governance. In contrast, the gains European tax havens make as destinations for shifted profits in terms of rights are almost negligible, given that almost all Europeans have those economic and social rights discussed in this paper fulfilled. The tax reforms championed by the Organisation for Economic Co-operation and Development (OECD), including 27 European member nations, to tackle aggressive corporate tax avoidance and tax evasion—in short, tax abuse—fall short of ensuring a suitable international order for rights to be achieved. To remedy this, all European countries must support negotiations on international tax cooperation at the United Nations. This should include reforms on regulating multinational corporations, particularly through unitary taxation with formulary apportionment. In the short- and medium-term, interim measures to mitigate the harmful impacts of profit shifting are necessary. Countries must take steps to raise the global minimum corporate tax rate, introduce unilateral measures to tax multinational corporations, improve tax transparency and information sharing with lower-income countries, and strengthen anti-avoidance rules.

Suggested Citation

  • Rachel Etter-Phoya & Stuart Murray & Stephen Hall & Michael Masiya & Bernadette O’Hare, 2025. "Profit shifting from Nigeria to Europe: The impact on human rights," PLOS Global Public Health, Public Library of Science, vol. 5(3), pages 1-29, March.
  • Handle: RePEc:plo:pgph00:0004218
    DOI: 10.1371/journal.pgph.0004218
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