Foreign tech giants operating in Nigeria contributed N2.55tn in taxes to the Federal Government in the first half of 2024, marking a significant increase from the previous year.
The taxes collected include Company Income Tax and Value Added Tax, sourced from data provided by the National Bureau of Statistics.
Company Income Tax is a 30% levy on corporate profits, while Value Added Tax is a 7.5% consumption tax paid by consumers when purchasing goods or services.
In response to the growing digital economy in Nigeria, the government planned to tax foreign digital service providers who earn revenue in the country in Nigerian naira.
These providers, including video streaming platforms and social media companies, are expected to pay digital taxes to the Federal Inland Revenue Service.
Companies like Netflix, Facebook, Twitter, Alibaba, and Amazon, which operate digitally in Nigeria without physical offices, are among those subject to these taxation regulations.
In early 2022, the government announced a six percent tax on turnover for offshore companies offering digital services to Nigerian customers, as outlined in the 2021 Finance Act.
The tax breakdown revealed that N1.72tn was paid as Company Income Tax and N831.47bn as Value Added Tax between January and June 2024.
Quarterly, Nigeria’s earnings from Company Income Tax surged by 87.2% from Q1 to Q2, contributing significantly to the total revenue collected in the second quarter.
Value Added Tax collections showed a slight decrease from Q1 to Q2, reflecting fluctuations in consumer spending.
The Minister for Finance announced that the government’s revenue in the first quarter of 2024 more than doubled compared to the previous year, reaching N9.1tn without tax hikes.