According to a report from the National Bureau of Statistics (NBS), in the first half of 2024, Google, Netflix, Facebook, and other international businesses with operations in Nigeria paid the federal government N2.55 trillion in taxes.
The sum is 158.76 per cent more than the N985.27 billion collected in the 2023 period prior. Value-added Tax (VAT) and Company Income Tax (CIT) are included in the figure.
The Federal Inland Revenue Service states that VAT is a 7.5% consumption tax paid by the final consumer when services are delivered and items are purchased. CIT is a 30% tax levied on businesses’ profits.
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Due to its widespread adoption by Nigerians, the Federal Government has stated plans to start collecting taxes in 2020 from international digital service companies that offer services and make money in naira.
Some service providers—social media networks, websites that stream videos, and businesses that sell digital material downloads—must submit digital tax returns to the Federal Inland Revenue Service.
Nigerians can access digital video and advertising services from companies like Netflix, Facebook, and Twitter, among others, operating in Nigeria without a physical office.
Some, such as Amazon and Alibaba, make money from Nigeria by processing and sending user data gathered there, supplying goods and services directly or via a digital platform, or providing middle-man services that connect Nigerian suppliers and buyers.
6% turnover tax on tech companies
Additionally, as stated in the 2021 Finance Act, the Federal Government of Nigeria announced in January 2022 that it would impose a six per cent turnover tax on overseas enterprises that supply digital services to Nigerian domestic clients.
An analysis of the records revealed that between January and June 2024, the corporations paid N1.72 trillion in CIT and N831.47 billion in VAT.
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Nigeria’s earnings from CIT climbed by 87.2 per cent quarterly, from N598.13 billion in Q1 to N1.12 trillion in Q2.
According to checks our reporter conducted, this was the most significant amount paid by the corporations and accounted for about 45.3% of the N2.4tn collected in the second quarter.
According to a VAT breakdown, Nigeria earned N435.73 billion in Q1 and N395.74 billion in Q2, a decrease of N39.99 billion.
According to information released on Tuesday by Wale Edun, the Minister of Finance and Coordinating Minister of the Economy, the Federal Government’s revenue for the first quarter of 2024 grew to N9.1 trillion, more than twice the amount recorded in 2023, without raising taxes.
