FG Rakes in N2 Trillion Taxes From Facebook, Twitter, Netflix, Other Foreign Companies
- Facebook, Google, and other tech and social media platforms have paid about N2 trillion in taxes to the Nigerian government
- The development follows the 2020 Finance Act signed by the previous administration
- The Act mandates foreign firms with significant presence and making money in naira to pay taxes to the country
Tech companies and other social media platforms such as Facebook, Google, Twitter, Netflix, and other foreign companies operating in Nigeria paid over N1.98 trillion in taxes to the Nigerian government in 15 months.
The amount includes both Company Income Tax and Value Added Tax, which are based on data from the National Bureau of Statistics (NBS).
Source: Getty Images
FG imposed taxes on foreign firms in 2020 Finance Act
The Federal Inland Revenue Service states that Company Income Tax (CIT) is a 30% tax charged on companies' profit, and VAT is a 7.5% consumption tax paid when goods are bought. Services are provided and are borne by the final consumer.
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In 2020, the Federal Government planned to tax foreign digital service providers, offering services to Nigerians and making revenue in the local currency.
Some of these providers, most of which are video streaming firms, social media sites, and companies offering downloads of digital content, are expected to pay digital tax to the FIRS.
The former Minister of Finance, Zainab Ahmed, gave the Company Income Tax Order 2020 to amend the Finance Act 2019.
Companies with enough economic presence in Nigeria to pay taxes
The Order sought to charge taxes on foreign companies regarding specific services or digital transactions if they had a Significant Economic Presence (SEP) in Nigeria.
The Order also stated that the finance minister might, through the Order, determine what SEP means in Nigeria.
Facebook, Netflix, and Twitter, now known as X, are some of the foreign firms offering digital video and advertising services to Nigerians.
Other tech firms and e-commerce firms like Alibaba and Amazon which make revenue from Nigeria by using collected about users in Nigeria and offering goods or services directly or via a digital platform, or providing intermediary services linking suppliers and customers in Nigeria.
Punch reports that the new law applies to companies with earnings of N25 million or equivalent in other currencies from Nigeria in a year and those with a Nigerian domain name or a website address in the company.
The SEP order required foreign entities interacting with people in Nigeria and customizing their digital platforms to pay taxes to the Nigerian government. It targeted persons in Nigeria by stating the prices of their products or services in naira to pay taxes.
Foreign companies exempted from paying taxes in Nigeria
The Act also says a foreign company providing technical services such as training, personnel supply, professional management, or consultancy services shall have SEP in Nigeria in any account year if it earns income or receives a fixed base or agent of a foreign company in Nigeria.
Payments made to foreign company employees or for teaching in an educational institution are exempt.
FIRS rakes in N5.5 trillion in tax revenue in 6 months, exceeds expectations
Legit.ng reported that the Federal Inland Revenue Service (FIRS) collected a total tax revenue of N5.5 trillion for six-month period from January to June 2023. Legit.ng earlier reported that FIRS set a new record after collecting over N10 trillion in revenue in 2022.
It was the first time the revenue agency crossed the N10 trillion mark in tax revenue collection.
The agency's realisation of this feat is coming despite the fact that Nigerians have been plagued by several economic hardships in the course of the six months including naira scarcity, inflation, fuel subsidy removal and high petrol prices.
Source: Legit.ng
