STATE HOUSE PRESS RELEASE

HOW FG WILL TAX PROFITS MADE BY GLOBAL TECH, DIGITAL GIANTS IN NIGERIA, BY OSINBAJO

*VP explains enabling provisions in Finance Act

*Interacting with Chartered Institute of Taxation members, Osinbajo says no tax increases contemplated for now

*CITN to VP: We acknowledge your great zeal
Nigeria is set to utilize its legal provisions that empower the Federal Government to collect taxes on profits made in the country by global technology and digital firms not based in the country, but with significant economic presence here.

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, including by 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 Minister (Finance) may by order (of the President) determine what constitutes the significant economic presence of a company other than a Nigerian company.”

Vice President Yemi Osinbajo, SAN, hinted at these issues and others while interacting with a delegation of the Chartered Institute of Taxation of Nigeria, CITN, led by its President, Mr Adesina Adedayo who visited him at the Presidential Villa on Friday.

According to Prof. Osinbajo, “we have had severe economic downturns which of course implies 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. Several efforts have been made, and 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.”

Continuing, the VP said “we have also recently taken a step with respect to a lot of the technology companies that are not represented here but who do huge volumes of business here.

“The Finance Act has shown that we are very prepared to ensure that these big technology companies do not escape without paying their fair share of taxation in Nigeria. 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.”

Indeed, besides the FG, a recent Bloomberg news article reported that "Governments around the world are grappling with how to modernize 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."

Also, international talks are currently ongoing in Paris on global standard rules for governments to receive taxes from such digital and technology firms with significant economic presence in foreign countries.

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 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 significant economic presence in Nigeria and profit can be attributable to such activity.

“If the trade or business comprises the furnishing of technical, management, consultancy or professional services outside of Nigeria to a person resident in Nigeria to the extent that the company has significant economic presence in Nigeria”

Speaking further, Prof. Osinbajo noted that while the Federal Government has no plans to raise taxes now, there are those who argue that “our tax rates are too low, comparing us to other places in the region where the rates are much higher.”

“So we have had to balance all of these issues because clearly, higher tax rates can be a disincentive to businesses and investments. In terms of domestic resource mobilization, we are trying to do the best we can given the present circumstances and I believe that there is room for improvement.”

Actually, under the Finance Act 2019, the Buhari administration has reduced taxes for small companies – companies with less than N25 million in annual turnover are charged Zero Company Income Tax, CIT. Also CIT for Companies with revenues between N25 and N100m (described in the Act as “medium-sized” companies) has been reduced from 30% to 20%. Besides, Nigerians making minimum wage income are not to pay tax at all.

Under the 2020 Finance Act there is also an exemption of small companies from payment of education tax under the Tertiary Education Trust fund (TETFUND)-meaning companies with less than N25m turnover are eligible

Similarly, there is a 50% per cent reduction in minimum tax; from 0.5 per cent to 0.25 per cent for gross turnover for financial years ending between January 1st, 2020 and December 31st, 2021

INTERACTION ON OTHER ISSUES
Welcoming the delegation, the Vice President emphasized the need for regular interaction between the council and government to address issues bothering on tax legislation, noting that “there is need for continuous engagement with the National Assembly because engagement with government cannot be a one-off thing.”

Prof. Osinbajo added that the Federal Government has over the past few years, initiated programmes aimed at improving the growth of small businesses including the formalization of many of them. Under the Economic Sustainability Plan (ESP), there is a formalization of 250,000 businesses.

He said the ongoing MSME Week has encouraged many businesses to register with regulatory authorities in order for them to benefit from the numerous programmes earmarked by the government for their growth.

Earlier in his remarks, the President of CITN, Mr Adesina Adedayo, commended the leadership of the Vice President in the implementation of key government interventions in the economy, stating that “we acknowledge your great zeal and commitment to Nigeria project.”

He said the visit became necessary given the enormous work the Buhari administration has done towards addressing the huge fiscal challenges in the polity, public financing reforms, and sustained efforts towards addressing infrastructural deficit across the country.

His words: “the Nigerian Economic Sustainability Plan (NESP) and other measures implemented was a right response to the challenges posed by COVID-19 pandemic and were largely instrumental to creating buffers for the government at all levels in withstanding the pressures and waves created during the peak period and the aftermath of COVID-19.

“It is important that we sustain measures already being implemented to improve tax collection at all levels.”

Other members of the delegation included the Vice President of the Institute, Barrister Samuel Olushola Agbeluyi, past Presidents of the institute, Dame Gladys Simplice, and Dr. James Naiyeju, and Council members Prof. Muhammad Mainoma and Hon. Babangida Ibrahim. Mr. Adefisayo Awogbade, CITN Registrar/Chief Executive was also in attendance.

Laolu Akande,
Senior Special Assistant to the President on Media & Publicity
Office of the Vice President
27th June 2021

Big tech companies need to start paying tax seriously, especially those that have huge and massive presence in Nigeria and the financial act is crystal clear. It's high time.

This is good, they own us too much

Tech companies can't be making huge money from Nigeria without paying tax, no country can develop without implementation of taxation. This is a great move by the government, I'm with the Vice President on this.

Pastor Zebedee

yes

Ok

Is it the global companies that Bubu suspends willy nilly and therefore impacts their productivity and profitability that they are referring to abi another global tech company

Lots of non locals are migrating their businesses and family from the north because the rules/people have become hostile to "foreigners" , same in other regions in the country.....pray tell why bubu thinks they can attract future investors to put their money in UAR after such disastrous policies, principles and behaviour continually displayed by his govt?? Even fellow fulani govts in Chad and Niger wont invest in the current UAR

Bolustical:
okkkk

All those adds.

Mtchewwww

I wanted to say it's a welcome development, but then, i remember it will be more money for the 1% to steal and mismanage

It's okay so far it doesn't amount to double taxation.

Elders on desk

This man is all talk and no action,he should please leave politics and go back to his pastorpreneural activities
The most useless VP in the history of Earth

Watch as RCCG members and gullible Yoruba people will flood this thread attacking me with his praise and saying his hands are tied..somebody that only knows how to share 5k

Good idea and its long over due

E no fit work, if every country start tax online tech companies, small ones no go grow because there small gain wey Dem suppose use improve, government go dey collect am.
Plus how them go take know how much the online tech companies make from Nigeria so Dem go know how much to tax them?

This man again, always talking big, you can only deceive your gullible followers.

Osinbajo .. na this kain brother fit Nigerian youths.

Una go siddon speak all the grammar and phonetics ... Las las .. wetin e go do, na wetin e go do.
E go even quote constitution, write report plus press release.

Awaiting Osinbajo 2023 ... I wonder what name Igbo (IPOB/UGM/ESN) terrorist will give him.

[img]https://media1./images/eaad1315b368d5aa1fea7f19bf6b47df/tenor.gif?itemid=8055436[/img]

Una dey pay tax?

TheRareGem1:
Big tech companies need to start paying tax seriously, especially those that have huge and massive presence in Nigeria and the financial act is crystal clear. It's high time.

Example of such companies?

NOT A BAD IDEA BUT JUST KNOW THE INTREST RATES OF ALL THE DOLLARS YOU BORROW FROM THE WEST WOULD GO UP BASED ON YOUR MOVE SO NO MATTER HOW YOU PLAY IT FG YOU WOULD STILL LOOSE THE WEST OWNS YOU AND YOU WOULD ALWAYS BE ITS BITCH

Did you know??

There’s a big difference between wielding your power and destroying your country.

#KeepitOn

Bolustical:
Watch out for white slaves who will condemn the FG for this good initiative.

How can a private entity keep making money from Nigeria without remitting its taxes?

Can a Nigerian firm try the same abroad without the FBI/IRS breathing on its neck?

The hatred for Buhari has made some of you haters of your country but we move.

What are you insinuating?

Do those entities have physical presence in Nigeria? No. Are they the only platforms making money from NIgerians no. What this actually translates to is that the government will be taxing virtually every website that generates income from NIgerians. If that doesn't translate to hardship for Nigerians, no problem.

The question is, why is Buhari all of a sudden interested in taxing tech companies heavily?

gambia:
This man again, always talking big, you can only deceive your gullible followers.

All talk and no action

escapefromusa:
Osinbajo .. na this kain brother fit Nigerian youths.

Una go siddon speak all the grammar and phonetics ... Las las .. wetin e go do, na wetin e go do.
E go even quote constitution, write report plus press release.

Awaiting Osinbajo 2023 ... I wonder what name Igbo (IPOB/UGM/ESN) terrorist will give him.

Osinbajo has actually shown himself to be an adept leader. However it seems Yorubas are still divided on who gets their support. Osinbajo or Tinubu. The latter will be a huge mistake.

Anything to move our darling nation forward is all we are after @[b][/b].

F

Tax, Profit & Borrow are the only languages this Gov't understand.

Silly idiots pontificating and doing what silly idiots do best. You know which African country can tax a gaint tech company like Twitter presently? Ghana.

When we say make policies that are investor friendly. When we say put the country in a position where they can take advantage of any form of global interest from local and foreign investors, this is what we mean.

Once they come in with huge money to invest in the country, taxing them will be easier than ABC.

But na lie. Buhari and co will rather die on the hill of cattle economics

So all you and BUBU can come up with is paying tax??

Interesting, why not tax profits generated in Nigeria