Nigeria plans to tax digital non-resident companies –

Don’t overtax Nigerians

The Federal Government yesterday said it has conluded plans to tax digital non-resident companies that sell products to local customers at 6 percent of turnover.

Finance Minister Zainab Ahmed, during a briefing in Abuja, Wednesday said that as part of fiscal reforms to boost revenues and diversify the oil-dependent economy, government would impose the tax to further boost its revenue.

At less than 10 per cent of GDP, Nigeria has one of the lowest tax rates in the world and has struggled to increase tax collection from its non-oil sector.

The was as the World Bank said last year Nigeria could raise the proportion to around 7 percent over the coming three years, assuming property tax, excise duty and personal income reforms are undertaken, and that non-oil taxes needed to be at least 12.75 percent of GDP.

“This is introducing turnover tax on a fair and reasonable basis,” Ahmed said referring to value-added tax (VAT) obligation of digital non-resident companies.

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Such digital services include apps, high frequency trading, electronic data storage and online advertising, Ahmed said in a televised speech discussing the 2022 budget signed into law last week.

Ahmed said the government wants to modernise taxes for its digital economy and to improve compliance.

She said digital non-resident companies do not need to be registered locally but would have an arrangement with the Nigerian tax authority to collect and remit taxes, as a way to reduce the compliance burden. Nigeria has imposed additional excise taxes on cigarette, alcoholic beverages and last year said it would consider introducing levies on telecoms airtime charges after it raised VAT to generate more money for government.

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