FIRS, the Netherlands Begin Double Taxation Treaty Renegotiation

 

Nigeria and the Kingdom of the Netherlands have formally commenced the renegotiation of their long-standing Double Taxation Agreement, marking a significant step in Nigeria’s ongoing push to modernise its tax regime and strengthen international cooperation on tax matters. The talks, which began at the Revenue House in Abuja, bring together senior officials of the Federal Inland Revenue Service (FIRS) and representatives of the Dutch government to review and update the treaty which has been in place since 1992.

The Executive Chairman of the FIRS, Dr. Zacch Adedeji, who hosted the Dutch delegation, described the renegotiation as timely and necessary, given the far-reaching tax reforms recently signed into law by President Bola Tinubu. Dr. Adedeji explained that Nigeria’s new tax laws, including the Nigeria Revenue Service (Establishment) Act and the Nigeria Tax Administration Act, reflect the country’s commitment to align its domestic tax system with international best practices and to close loopholes that have historically enabled tax evasion and profit shifting by multinational companies.

For the Netherlands, the renegotiation is equally important. Ambassador Bengt van Loosdrecht, who led the Dutch delegation, said the treaty has been a pillar of economic ties between both countries for decades and must now be updated to match today’s realities. He noted that Dutch businesses have a strong presence in Nigeria, particularly in sectors such as oil and gas, agriculture, and financial services, and that a modernised tax treaty will provide them with greater certainty while ensuring Nigeria receives fair tax revenues.

The double taxation treaty aims to prevent companies and individuals operating in both countries from being taxed twice on the same income. It also sets out rules for taxing dividends, interests, royalties, and capital gains, and includes measures to tackle tax evasion. However, over the years, parts of the treaty have become outdated, leaving room for mismatches that can result in revenue loss for Nigeria and create confusion for businesses.

One of the main goals of the renegotiation is to update withholding tax rates on dividends, interests, and royalties so that they better reflect current economic conditions and are fair to both sides. Another important area is the inclusion of stronger clauses for exchanging information between tax authorities to make it harder for companies to hide profits or shift income to avoid paying taxes. The new treaty is also expected to address digital taxation issues, which were not foreseen when the original agreement was signed more than 30 years ago.

During the opening session, Dr. Adedeji stressed that Nigeria is determined to ensure that tax treaties serve national interests while supporting foreign investment. He said the FIRS will not accept any arrangement that denies the country of its rightful tax revenues, adding that the era of companies exploiting treaty loopholes to avoid paying their fair share is coming to an end. He assured the Dutch delegation that the renegotiation would be fair and transparent, with both countries seeking a win-win outcome.

Ambassador van Loosdrecht praised the professionalism of the FIRS team and expressed optimism that the negotiations would lead to a balanced treaty that promotes trade and investment while safeguarding tax revenue for both countries. He said the Netherlands remains one of Nigeria’s key trading partners in Europe and sees the renegotiation as an opportunity to deepen economic ties even further.

Tax experts and industry stakeholders have welcomed the development, noting that modernising old tax treaties is crucial for Nigeria as it works to expand its tax base and increase non-oil revenue. Analysts say that a modernised treaty with the Netherlands could serve as a template for renegotiating similar agreements with other countries. Nigeria currently has tax treaties with about 15 countries, many of which were signed decades ago and no longer align with today’s global standards.

The renegotiation is also part of Nigeria’s wider effort to comply with global initiatives such as the OECD’s Base Erosion and Profit Shifting (BEPS) framework, which aims to stop companies from shifting profits to low-tax jurisdictions to avoid paying taxes where they earn their income. By updating its tax treaties, Nigeria hopes to reduce aggressive tax planning by multinational companies and boost revenue collection.

In the coming months, technical teams from both countries will meet to work through the detailed provisions of the treaty, including definitions of permanent establishments, methods for eliminating double taxation, and procedures for resolving disputes. Stakeholders expect that once the new treaty is finalised, it will be signed by both governments and ratified by their respective legislatures.

The FIRS has also indicated that it will engage the business community and tax professionals during the process to ensure that the final agreement addresses practical concerns and provides clarity for companies operating in both countries. Dr. Adedeji reaffirmed that the FIRS remains committed to working openly with partners to make Nigeria’s tax environment more transparent, fair, and attractive for investment.

For Nigeria, the successful renegotiation of the treaty with the Netherlands could open the door for similar updates with countries like the United Kingdom, Canada, and China. Such steps would help strengthen Nigeria’s position in the global tax system while supporting its domestic goal of raising more revenue to fund infrastructure, education, healthcare, and other critical needs.

As talks continue, both sides have promised to approach the negotiations in good faith, with the hope that the updated agreement will serve as a modern tool for economic cooperation, protect Nigeria’s tax interests, and give businesses the confidence to deepen investments that create jobs and drive sustainable growth.