Nigeria and the Netherlands officially began renegotiating their bilateral Double Taxation Agreement (DTA) in Abuja on Monday. Hosted at the FIRS Revenue House, the opening session featured Dr. Zacch Adedeji, Executive Chairman of the FIRS, and was joined by a delegation led by Dutch Ambassador Bengt van Loosdrecht. This marks the first formal revision effort since President Bola Tinubu signed Nigeria’s comprehensive Tax Reform Bills into law on June 26, 2025.

The timing proves opportune. The domestic tax landscape has dramatically evolved, driven by both national reforms and global initiatives such as the OECD/G20 Base Erosion and Profit Shifting (BEPS) framework. These developments prompted Dr. Adedeji to describe the negotiations as “timely and necessary,” noting that existing treaties risk obsolescence without updates aligned with modern tax standards.

Why This Renegotiation Matters

1. Modernizing an Outdated 1992 Treaty

The current Nigeria–Netherlands DTA dates back to 1992, along with its precursor signed in 1991 . It set basic rules on withholding taxes, permanent establishment, and cross-border income. However, the treaty lacks provisions for:

• Digital economy taxation

• Anti-BEPS safeguards, such as the Principal Purpose Test

• Multilateral treaty network and minimum tax standards

This outdated framework could encourage treaty abuse and profit shifting—an increasing concern given Nigeria’s efforts to broaden its tax base.

2. Integrating Recent Overhauls in Nigeria’s Tax Structure

The renegotiation aligns directly with Nigeria’s newly enacted reforms: the Nigeria Tax Act, Tax Administration Act, Nigeria Revenue Service Establishment Act, and Joint Revenue Board Act — collectively the most substantial revamp of Nigeria’s tax system in decades. These act to:

• Merge and simplify existing laws

• Establish the Nigeria Revenue Service (NRS), replacing FIRS

• Reinforce revenue collection, compliance, and investor trust

A treaty built around the reformed structure supports streamlined operations and clarity for both taxpayers and tax authorities.

3. Preventing Double Taxation and Erosion of Base

DTAs aim to prevent the same income from being taxed twice, while also shielding developing countries from base erosion. Nigeria’s DTA network currently spans 16 countries, including the Netherlands. However, the existing DTA lacks concrete BEPS measures meant to address profit shifting. Updating it ensures:

• Clarity on withholding tax rates for dividends, interest, and royalties

• Stronger dispute resolution and mutual agreement protocols

• Revised definitions of permanent establishment (PE) and update of exchange-of-info mechanisms

These reforms aim to align with global norms and reduce tax avoidance.

What’s on the Negotiation Table

Dr. Adedeji emphasized key points in the statement:

1. Alignment with Nigeria’s fiscal goals

   • Expanding the tax base beyond traditional sectors

   • Strengthening domestic revenue mobilization

   • Ensuring tax laws support economic growth

2. Global compliance

   • Incorporating BEPS-related rules, such as Principal Purpose Tests

   • Implementing enhanced transparency, exchange of information, and dispute resolution

3. Review of outdated provisions

   • Adjusting withholding tax limits

   • Expanding coverage to new forms of income

   • Updating definitions related to taxation rights and residency

Meanwhile, Ambassador van Loosdrecht emphasized collaboration and mutual benefit:

“A treaty is about finding common ground… both sides have very competent, professional teams… I am confident we will have a very fruitful week.”

Their shared tone signals strong bilateral commitment toward a balanced, future-ready agreement.

Historical and Comparative Context

• Nigeria–Netherlands DTA History
  The original treaty, concluded in Lagos on December 11, 1991, and effective from January 1993, included conventional measures on tax credits and PE definitions.
  Many provisions remain legally sound but fail to capture modern tax challenges.

• BEPS and Tax Transparency
  The OECD’s BEPS project aims to curb profit shifting through countermeasures such as Multilateral Instrument (MLI) adoption, enforcement of PPT, and enhanced dispute resolution tools . Nigeria’s inclusion of these features is essential for treaty relevance.

• Nigeria’s Broader DTA Landscape
  Nigeria has comprehensive DTAs with countries like Canada, China, and the U.K., alongside partial treaties for air and shipping. These treaties uniformly cap withholding taxes at 7.5% for dividends, interest, and royalties. Renegotiating with the Netherlands offers a chance to harmonize terms and improve enforcement.

What the Public Should Know

In the coming months, negotiators will work intensively to match the new treaty with Nigeria’s fiscal realities and international standards.

What Comes Next?

1. Six-Month Harmonization Phase
Nigeria aims to use the next half-year effectively: syncing tax data, integrating systems, and updating legal instruments.

2. Expanded Multilateral Talks
The Netherlands’ early action sets a tone. Nigeria may invite other treaty partners like Canada and the U.K. to renegotiate and align.

3. NRS Launch
The Nigeria Revenue Service will commence operations on January 1, 2026, backed by modernized tax laws and aligned international agreements.

4. Treaty Publication and Ratification
A revised DTA will undergo legislative scrutiny, recall by the National Assembly, and ratification. Only then will it become binding domestically.

5. Economic Outcomes
A modernized treaty deepens Dutch investment incentives, safeguards Nigeria’s tax base, and ensures clarity for investors. It also helps curb tax avoidance and fosters inclusive economic growth.

Final Analysis

Nigeria’s decision to renegotiate its DTA with the Netherlands marks a crucial junction in its fiscal evolution. It reflects:

• A strong response to Myanmar’s comprehensive tax law modernization

• A commitment to global standards, investor confidence, and economic growth

• Proactivity: setting a benchmark for renegotiations with all bilateral tax partners

By incorporating robust anti-BEPS rules, transparency measures, updated withholding tax terms, and clear dispute resolution mechanisms, Nigeria positions itself as a regionally leading jurisdiction in tax policy.

The ongoing negotiations spell a bridge between old tax frameworks and a future-ready, fairer system. If successfully concluded, they could usher in a new era of fiscal clarity, global compliance, and sustainable investment for Nigeria.