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Facebook,Netflix,Alibaba, Google, Others Digital Service Providers To Start Paying Tax In Nigeria

Nigeria Government has set out plans to ensure foreign-owned digital service to start paying tax .

The social media platforms, video streaming sites and other companies offering digital content downloads providers that generate revenue from Nigeria , are expected to pay digital taxes to Federal Inland Revenue Service.

This was disclosed by Minister of Finance Budget and National Planning, Zainab Ahmed during the weekend that Companies Income Tax (Significant Economic Presence) Order, 2020 as an amendment of the Finance Act 2019.

This asmade know after the government has confirmed that the Covid-19 pandemic has affected most of Nigeria’s sources of revenue. With the stay-at-home order and social distancing, there has been an increase in online patronage, which has led to more gains for these digital platforms.

The order aimed to impose tax on a foreign entity with respect to certain services or digital transactions if it had a Significant Economic Presence in Nigeria.

The new policy will only affect foreign companies listed under the Significant Economic Presence (SEP) category. However, she said the ministry, may by order, determines what constituted SEP in Nigeria.

Some of the businesses to be affected are Facebook with over 27 million monthly users and about 16 million daily users, Google,Instagram 22 million, Alibaba, Amazon, Netflix, Twitter and others.

These affected companies will be mandated to register for income taxes in the country despite not having a physical presence in Nigeria.

According to the Act, a foreign entity providing technical services such as training, advertising, supply of personnel, professional, management or consultancy services shall have a SEP in Nigeria in any accounting year if it earns any income or receives any payment from a person resident in Nigeria or a fixed base or agent of a foreign entity in Nigeria.

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