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We’ll Tax Profits Made By Global Giants In Nigeria - Osinbajo

28/06/2021 32 Views

The Federal Government has said that it is set to utilize legal provisions empowering it to collect taxes on profits made by global technology and digital firms not based in Nigeria, but having significant economic presence in the country.

Vice President Yemi Osinbajo, stated this when he interacted with a delegation of the Chartered Institute of Taxation of Nigeria, CITN, led by its President, Mr Adesina Adedayo who visited the Presidential Villa, Abuja on Friday.

He said while the Federal Government will not be raising tax rates at this time, based on the Finance Act 2019, it was already empowered to widen the tax net.

This, the FG said, includes taxes on the Nigerian income of global giants with significant economic presence, even if they have not set up presence or permanent establishment and are currently not paying taxes in the country.

According to him, 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.”

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.”

He further 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.”

Besides, 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”


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