By Daniel Edu
Google, Netflix, Facebook, and other foreign companies operating in Nigeria have collectively paid over N1.98 trillion in taxes to the Federal Government over a 15-month period, according to data from the National Bureau of Statistics.
The taxes include both Company Income Tax (CIT) and Value Added Tax (VAT). CIT is a 30% tax on the profits of companies, while VAT is a 7.5% consumption tax paid on goods and services purchased.
The former Minister of Finance, Zainab Ahmed, had introduced the Companies Income Tax (Significant Economic Presence) Order, 2020 to impose tax on foreign entities providing digital services to Nigerians and earning revenue in naira. The tax is levied on companies offering services or digital transactions with a significant economic presence in Nigeria.
The Nigerian government has been working to modernize its tax regulations to capture revenue from foreign digital service providers. This includes introducing turnover taxes on foreign companies providing digital services and imposing VAT on non-resident digital companies.
Between the first quarter of 2022 and Q1 2023, the government earned N1.32 trillion in CIT and N661.93 billion in VAT from foreign companies.
This move is part of a global trend where governments are trying to ensure that foreign tech companies contribute their fair share of taxes in the countries where they operate, especially as digital services continue to play a significant role in the global economy.
