Google, Netflix, Facebook, and other foreign companies operating in Nigeria have paid a total of N2.55 trillion in taxes to the Nigerian Federal Government in the first six months of 2024.
This marks a significant increase of 158.76% from the N985.27 billion collected during the same period in 2023, according to a report by the PUNCH.
The figure includes Company Income Tax (CIT) and Value Added Tax (VAT), based on data from the National Bureau of Statistics. The Federal Inland Revenue Service (FIRS) explains that CIT is a 30% tax on company profits, while VAT is a 7.5% tax on goods and services paid by the final consumer.
The Nigerian government started collecting taxes from foreign digital service providers in 2020, including video streaming platforms, social media sites, and other companies that offer digital downloads. Companies such as Netflix, Facebook, and Twitter, which do not have physical offices in Nigeria, are required to pay digital taxes due to their significant earnings in the country.
These foreign companies provide various services to Nigerians, including video streaming, digital advertising, and data processing. Companies like Alibaba and Amazon generate revenue by offering goods or services directly or through digital platforms to Nigerian customers.
In January 2022, the government also introduced a six percent tax on the turnover of offshore companies providing digital services to local customers, as part of the 2021 Finance Act.
A breakdown of the tax collection shows that N1.72 trillion was paid as CIT, while N831.47 billion came from VAT between January and June 2024.
On a quarterly basis, earnings from CIT rose by 87.2%, increasing from N598.13 billion in the first quarter to N1.12 trillion in the second quarter. The companies’ contributions made up more than 45.3% of the N2.4 trillion collected in the second quarter.
Regarding VAT, Nigeria earned N435.73 billion in the first quarter and N395.74 billion in the second quarter, representing a slight reduction of N39.99 billion.
On Tuesday, Nigeria’s Minister for Finance and Coordinating Minister of the Economy, Wale Edun, stated, “The Federal Government’s revenue for the first quarter of 2024 increased to N9.1 trillion, more than doubling the amount recorded in 2023 without increasing taxes.”
