The Nigerian government may have concluded plans to compel big tech companies such as Twitter, Facebook, Google, and Skype to pay taxes and charge their customers VAT for services rendered. This was confirmed by a mail sent to customers by one of the affected companies, Skype, on Thursday, 10th of June 2021.
In the letter, Skype said it was compelled by the Nigerian government’s tax requirement to commence including the value-added tax on the purchase of its service by Nigerian customers. These customers are mostly businesses that pay for subscriptions and other services on Skype. In the case of Facebook, Twitter, and other social media platforms, the customers would likely pay VAT for placing adverts on these platforms or using WhatsApp Business.
The development follows the ban on Twitter’s operations in Nigeria and the directive by the Nigerian government to the Nigerian Broadcasting Commission (NBC) to commence registration of OTT and social media platforms within the country. After the directive, NBC, in an advertorial published in some major newspapers, said all online broadcast service providers and social media platforms which include Facebook, Instagram, WhatsApp, YouTube, TikTok, and others would need to obtain broadcast licences for their services.
According to Armstrong Idachaba, Acting Director-General of NBC, the directive is in line with the provision of the National Broadcasting Act CA N11, Laws of the Federation 2004, section 2(1), which states that “the Commission shall have the responsibility of receiving, processing, and considering applications for the establishment, ownership or operation of Radio and Television Stations including cable television services, Direct Satellite Broadcast (DSB), and any medium of Broadcasting”.
“The National Broadcasting Commission hereby directs every online broadcast service provider and social media platforms operating within the Nigerian state to apply and obtain a broadcast licence for their service(s),” NBC said. Registered companies in Nigeria are within the purview of the tax regulator, Federal Inland Revenue Service (FIRS).
The situation appears to have been remedied by the Finance Act 2019 which amended certain sections of the Companies Income Tax Act. Also, the Minister of Finance, Budget and National Planning issued an order in 2020. “Based on the order, non-resident companies that are operating in the digital space even though they do not have a physical presence in Nigeria may be liable to tax in Nigeria if they meet the conditions specified like a sustained interaction with persons in Nigeria, have customers in Nigeria, then they would be taxable in Nigeria,” Alao said.