Our Reporter
The Federal Government has vowed big technology and digital companies with a significant economic presence in Nigeria, though without physical offices, won’t escape tax payments henceforth.
The government said it would rely on the provisions of the Finance Act 2019 to ensure that they no longer escape such payments.
It noted its decision was in tandem with ongoing international talks in Paris on global standard rules for governments to receive taxes from technology and digital firms with a significant economic presence in foreign countries.
Vice President Yemi Osinbajo made these known during an interaction with a delegation from the Chartered Institute of Taxation of Nigeria (CITN) led by its President, Mr. Adesina Adedayo, at the Presidential Villa in Abuja.
Osinbajo did not make reference to Twitter, a United States-based micro-blogging platform, currently in a faceoff with Nigeria.
The Federal Government had accused Twitter of threatening Nigeria’s sovereignty by sponsoring the last October #EndSARS protests and being a choice platform of Indigenous People of Biafra (IPOB) Nnamdi Kanu.
It said for the platform and other social media outfits like Facebook and Instagram to continue to do business in Nigeria, they must first register with the Corporate Affairs Commission, get licensed and pay taxes.
During the interaction with the CITN team, the Vice-President also explained that widening Federal Government’s tax net did not mean there was a plan to increase tax rates.
Osinbajo, according to a statement by his spokesman, Laolu Akande, said: “While the Federal Government will not be raising tax rates at this time, based on the Finance Act 2019, it is already empowered to widen the tax net.
“This includes collecting taxes on the Nigerian income of global tech giants with significant economic presence here, even if they have not established an office or permanent establishment, and are currently not paying taxes in Nigeria.
“In this regard, Section 4 of the Finance Act 2019, provides that the Finance minister, may by order of the president, determine what constitutes the significant economic presence of a company, other than a Nigerian company.
“We have had severe economic downturns, which of course imply that we may not be able to collect taxes with the aggressiveness that would ordinarily be expected.
“I think the most important thing is that we must widen our tax net so that more people who are eligible to pay tax are paying.
“I am sure you are aware of the initiatives, including the Voluntary Assets and Income Declaration Scheme (VAIDS), which was also an attempt to bring more people into the tax net, including those who have foreign assets.
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“Many of them do incredible volumes here in Nigeria and in several other parts of the region.
“We have drawn up the regulations and we are prepared to go, and I think that we are at least in a good place to tap into some of the tax resources we can get from some of these companies.
“Besides the Federal Government, a recent Bloomberg news article reported that “Governments around the world are grappling with how to modernise their legal frameworks to account for the global reach of the digital economy, reshaping how policymakers think about issues as varied as monopoly power, taxation and workers’ rights.”
Osinbajo gave further explanations on legal provisions for the subject matter, saying: “In Nigeria, according to the Finance Act 2019, a company will pay taxes if it transmits, emits or receives signals, sounds, messages, images or data of any kind by cable, radio, electromagnetic systems, or any other electronic or wireless apparatus to Nigeria.
“This in respect of any activity, including electronic commerce, application store, high-frequency trading, electronic data storage, online adverts, participative network platform, online payments and so on, to the extent that the company has a significant economic presence in Nigeria and profit can be attributable to such activity.”
He insisted the government had no plans to raise taxes despite arguments in some quarters that Nigeria’s tax rates were too low.
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