The Role of International Tax Treaties in Resolving Double Taxation Issues: A Case Study of Nigeria and Ghana
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Background of the Study
International tax treaties, specifically Double Taxation Agreements (DTAs), are crucial instruments in international trade and investment, designed to address the issue of double taxation. These treaties allocate taxing rights between countries and help resolve conflicts in tax jurisdictions, providing mechanisms for relief through tax credits, exemptions, and reductions. They are particularly important for countries like Nigeria and Ghana, which share strong economic and trade relations but have distinct tax systems.
Nigeria and Ghana have entered into several tax treaties, which aim to facilitate cross-border trade and investment by mitigating the problem of double taxation. These treaties are designed to avoid the simultaneous taxation of income in both countries, which can discourage investment and hinder business operations. For multinational companies and individuals operating between the two countries, the presence of such treaties is expected to reduce the tax burden, simplify tax compliance, and encourage economic growth.
Despite the existence of these international tax treaties, the implementation and enforcement of these agreements remain challenging, particularly in terms of ensuring that tax credits and exemptions are effectively utilized. Additionally, issues such as inconsistencies in tax administration, limited awareness of the provisions of these treaties, and bureaucratic hurdles can hinder the benefits that businesses and individuals might gain from such agreements.
This study seeks to explore the role of international tax treaties in resolving double taxation issues between Nigeria and Ghana, focusing on how effectively these treaties mitigate tax burdens for businesses and individuals operating between the two countries.
Statement of the Problem
While international tax treaties, including those between Nigeria and Ghana, are designed to address double taxation issues, their effectiveness is often limited by issues such as inconsistent enforcement, lack of understanding of treaty provisions, and administrative challenges. For businesses and individuals operating between the two countries, the benefits of these treaties may not always be fully realized, reducing their potential to enhance trade and investment.
This study aims to critically examine the role of international tax treaties in resolving double taxation issues between Nigeria and Ghana and to assess their impact on cross-border trade and investment.
Objectives of the Study
- To evaluate the effectiveness of international tax treaties between Nigeria and Ghana in resolving double taxation issues.
- To identify the challenges faced by businesses in utilizing the provisions of the Nigeria-Ghana tax treaty.
- To assess the impact of international tax treaties on trade and investment between Nigeria and Ghana.
Research Questions
- How effective are the international tax treaties between Nigeria and Ghana in addressing double taxation issues?
- What challenges do businesses face in utilizing the provisions of the Nigeria-Ghana tax treaty?
- How do international tax treaties impact trade and investment between Nigeria and Ghana?
Research Hypotheses
- H0: The international tax treaties between Nigeria and Ghana do not significantly reduce double taxation issues for businesses.
- H0: Businesses do not face significant challenges in utilizing the provisions of the Nigeria-Ghana tax treaty.
- H0: International tax treaties do not significantly impact trade and investment between Nigeria and Ghana.
Scope and Limitations of the Study
The study will focus on the international tax treaties between Nigeria and Ghana, evaluating their role in resolving double taxation issues and their impact on trade and investment. The analysis will cover the period from 2020 to 2025. Limitations include difficulties in accessing detailed tax data from businesses and government agencies, as well as the complexity of evaluating the full scope of cross-border tax issues.
Definitions of Terms
- International Tax Treaties: Agreements between two or more countries that aim to prevent double taxation and allocate taxing rights.
- Double Taxation: The taxation of the same income or asset by more than one jurisdiction.
- Cross-Border Trade: The exchange of goods and services between businesses in different countries.
- Tax Credit: A reduction in tax liability, typically granted to taxpayers who have already paid taxes in another jurisdiction.
- Tax Exemption: A provision that relieves taxpayers from the obligation to pay taxes on certain income or transactions.
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