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FG Set To Tax Netflix, Facebook, Twitter, Other Digital Service Providers

Recently the Federal Government of Nigeria had revealed plans to tax foreign digital service providers offering services to Nigerians and earning revenue in naira.

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Most of these service providers are known to be video streaming sites, social media platforms, and companies that offer downloads of digital contents are expected to pay digital tax to the Federal Inland Revenue Service.

The Minister of Finance, Zainab Ahmed, had issued the Companies Income Tax (Significant Economic Presence) Order, 2020 as an amendment of the Finance Act 2019.

The order aimed to impose a tax on a overseas entity with appreciate to certain services or digital transactions if it had a sizeable financial Presence in Nigeria.

It in addition said that the finance minister can also by way of order, decide what constituted SEP in Nigeria.

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Netflix, FB, Twitter, among others are a number of these foreign agencies that provide digital video and advertising services to Nigerians.

Others like Alibaba and Amazon generate revenue from Nigeria with the aid of processing and transmitting records amassed approximately users in Nigeria, provision of goods or services at once or via a digital platform or provide intermediate services that link providers and clients in Nigeria.

The new law could observe to agencies with income of N25m or equal in other currencies from Nigeria in a 12 months and those with a Nigerian area call (.Ng) or a internet site address in the USA.

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The SEP order mandated overseas corporations with sustained interactions with men and women in Nigeria and customizing their virtual systems to goal men and women in Nigeria by stating the charges of its services or products in naira to pay taxes.

In line with the Act, a foreign entity imparting technical services consisting of schooling, advertising, supply of employees, expert, management or consultancy services shall have a SEP in Nigeria in any accounting year if it earns any profits or gets any charge from someone resident in Nigeria or a set base or agent of a overseas entity in Nigeria.

But, bills made to personnel of a foreign entity or for coaching in an academic group are exempted.

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Analysts at PricewaterhouseCoopers said a few affected overseas virtual businesses might be required to register for income taxes in Nigeria and file annual tax returns although they did not have a bodily presence in Nigeria.

They delivered that Nigerian resident corporations (in addition to the fixed bases of non-resident organizations) that have transactions with the affected non-resident businesses might also be required to account for withholding tax on a few bills made to these foreign corporations.

Percent raised concerns as to how the FIRS would implement compliance without international consensus, as a number of the organizations affected is probably out of doors the territorial reach of the company.

Consistent with the consulting firm, the trouble may also be exacerbated wherein the companies sell their services and products immediately to character customers in Nigeria.

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