Foreign companies operating in Nigeria, including tech giants like Google, Netflix, and Facebook, contributed a substantial N2.55 trillion in taxes to the Federal Government during the first six months of 2024. This marked an impressive 158.76% increase compared to the N985.27 billion collected during the same period in 2023.
The tax contributions were derived from Company Income Tax (CIT) and Value Added Tax (VAT), as reported by the National Bureau of Statistics. The Federal Inland Revenue Service (FIRS) explained that CIT is a 30% tax imposed on company profits, while VAT, at 7.5%, is a consumption tax paid by the final consumer when goods and services are purchased or rendered.
In 2020, the Federal Government initiated plans to tax foreign digital service providers, especially those earning revenue in naira without a physical presence in Nigeria. These companies, which include video streaming services, social media platforms, and digital content providers such as Netflix, Facebook, and Twitter, are now required to pay taxes to the FIRS. Others, like Alibaba and Amazon, generate revenue by processing data, providing goods or services, or offering intermediary services through digital platforms to Nigerian consumers.
In January 2022, the government introduced a 6% tax on the turnover of offshore digital service providers, as stipulated in the 2021 Finance Act.
A breakdown of the tax contributions showed that N1.72 trillion came from CIT, while N831.47 billion was collected as VAT between January and June 2024. Quarterly reports indicated a significant rise in CIT revenue, increasing by 87.2% from N598.13 billion in Q1 to N1.12 trillion in Q2. In contrast, VAT earnings saw a slight decline, with N435.73 billion collected in Q1 and N395.74 billion in Q2, a decrease of N39.99 billion.
In addition to these foreign tax contributions, Nigeria’s overall revenue for the first quarter of 2024 reached N9.1 trillion, a significant increase from 2023 figures. The Minister for Finance and Coordinating Minister of the Economy, Wale Edun, emphasized that this increase was achieved without raising taxes.
