Foreign companies such as Google, Netflix, and Facebook remitted taxes totaling ₦3.85tn to the Nigerian Federal Government in the first nine months of 2024.
This marks a significant 68.12% increase from the ₦2.29tn collected during the same period in 2023.
Data sourced from the National Bureau of Statistics on Tuesday revealed that the taxes, which include Company Income Tax and Value Added Tax showed notable growth over the quarters.
Tax remittances grew by 26.21%, moving from ₦1.03tn in Q1 to ₦1.52tn in Q2, before settling at ₦1.30tn in Q3.
An analysis of the data highlighted a substantial rise in CIT, with foreign companies contributing ₦2.57tn between January and September 2024—a 43.65% increase compared to the ₦1.789tn collected in the same period of the previous year.
Similarly, VAT collections reached ₦1.28tn, reflecting a staggering 157.03% jump from ₦498.34bn recorded in 2023.
The Federal Inland Revenue Service explained that CIT is levied at 30% on company profits, while VAT, at 7.5%, is a consumption tax borne by the final consumer.
Quarterly trends show CIT revenue rose significantly, starting at ₦598.13bn in Q1, surging to ₦1.12tn in Q2, and recording ₦852.29bn in Q3.
VAT collection followed a steadier trajectory, with earnings of ₦435.73bn in Q1, ₦395.74bn in Q2, and ₦448.85bn in Q3, representing a modest 3.01% increase of ₦13.12bn over the quarter.
In 2020, Nigeria initiated efforts to tax foreign digital service providers earning revenue in naira. These include platforms such as Netflix, Facebook, and Twitter, which, despite lacking physical offices in Nigeria, generate substantial income from digital video and advertising services offered to Nigerian consumers.
Other global entities like Alibaba and Amazon earn revenue by processing user data, providing goods and services directly or through digital platforms, and facilitating supplier-customer interactions.
Tax revenues from these companies are expected to increase further as additional platforms comply with Nigeria’s tax regulations.
However, the National Information Technology Development Agency recently disclosed that TikTok and X have yet to meet Nigeria’s tax filing requirements.
Conversely, companies like Google, LinkedIn, and Meta are compliant with the “Code of Practice for Interactive Computer Service Platforms and Internet Intermediaries,” outlined in Part III, Sections 3–1, and Part II, Section 10.
Earlier in 2024, the former Accountant-General of the Federation, Oluwatoyin Madein, emphasized the importance of tax revenue as Nigeria’s leading income source.
She highlighted its significance for government operations, saying, “Tax revenues today are the highest source of revenue accruing to the federation. Therefore, at the federation account allocation committee meetings, we eagerly await the numbers coming from the FIRS because the performance keeps on increasing and brings succour to all tiers of government.”
The FIRS has a tax revenue target of ₦19.4tn for 2024, with over ₦18.5tn already remitted.
