The Corporate Affairs Commission (CAC) has announced plans to take drastic measures, including shutting down Point of Sale (PoS) businesses that have failed to comply with its mandatory registration directive.

This follows the expiration of a 60-day registration deadline on September 5, 2024.

In a public notice issued on Friday, the CAC stated that there was inadequate compliance with its directive and warned that operators who failed to register might be involved in “unwholesome activities.”

The commission emphasized its commitment to work with law enforcement agencies and other stakeholders to implement a comprehensive enforcement and sanction framework, which could include business shutdowns and severe legal consequences.

“The Corporate Affairs Commission wishes to remind the general public, particularly Fintech operators also known as Point of Sale (POS) operators, that the 60-day deadline…for the registration of such businesses expired on September 5, 2024,” the notice read.

The commission commended those who had complied but criticized those who had not, suggesting that their refusal could be due to involvement in improper activities.

This development comes amid opposition from fintech business owners under the Association of Mobile Money and Bank Agents in Nigeria (AMMBAN), who have challenged the CAC’s registration requirement in court, describing it as illegal.

AMMBAN maintains that the directive violates the Companies and Allied Matters Act (CAMA), which states that the CAC has no jurisdiction over individuals not operating as a company.

The association’s General Secretary, Oluwasegun Elegbede, stated that the case is already in court and is set for hearing in September.

Earlier in May, the CAC had mandated that PoS agents of major fintech companies, including OPay, Palmpay, and Moniepoint, register their businesses by July 7, 2024.

The deadline was later extended to September 5, 2024, with a warning that non-compliance would lead to prosecution and potential business closures.The directive comes amid concerns about rising fraud involving PoS terminals and the Central Bank of Nigeria’s (CBN) efforts to regulate cryptocurrency transactions.

According to the Nigeria Inter-Bank Settlement System (NIBSS) Plc, PoS terminals accounted for 26.37% of fraud incidents in 2023.

CAC’s Registrar-General, Hussaini Magaji, defended the registration requirement, citing Section 863, Subsection 1 of the Companies and Allied Matters Act (CAMA) 2020 and the 2013 CBN guidelines on agent banking.

He argued that the move is aimed at safeguarding fintech businesses and customers while strengthening the economy.

As the court prepares to hear the case, the CAC remains resolute in its enforcement strategy, with potential business shutdowns looming for non-compliant operators.

The post CAC Moves to Shut Down Unregistered PoS Businesses as Deadline Lapses appeared first on Tech Digest News.

In the evolving digital landscape of Nigeria, a recent statement by the Registrar General of the Corporate Affairs Commission (CAC), Hussaini Magaji, has sparked a significant conversation about the regulatory framework governing content creators and their tax obligations. The call for social media influencers, Instagram users, and TikTok users with large followings to register their businesses under the Company and Allied Matters Act (CAMA) 2020, reflects an increasing interest from regulatory bodies in the economic activities generated through digital platforms.

However, this raises critical questions about the capacity of the CAC to enforce tax compliance, its understanding of its role vis-a-vis the digital sector, and the broader implications for digital entrepreneurs in Nigeria.

Firstly, it is essential to clarify the legal boundaries within which the CAC operates. The CAMA 2020 does mandate the registration of businesses operating within Nigeria; however, its jurisdiction does not extend to enforcing tax compliance or collection.

If CAC understands the overall content creation space, it will clearly understand it cannot force a content creator who is work for hire to register a business name or sole proprietorship – any coercive act is unconstitutional. Infact, they do not need to register as their income can fall under personal income. Registering as a business name does not guarantee tax will be paid [we know that already].

Additionally, taxation, especially in the context discussed by Magaji, falls within the purview of the Federal Inland Revenue Service (FIRS) and state governments for personal income taxes. Precisely, the FIRS has articulated that its mandate does not include taxing individual content creators directly, as highlighted in an article by The Cable, where it was stated that there are no plans by the FIRS to tax content creators directly. The FIRS maintains that it focuses on corporate entities and businesses with significant profit margins, leaving individual creators largely within the taxation oversight of state governments.

The distinction made by the FIRS underscores a critical aspect of Nigeria’s tax system, emphasizing the decentralized nature of personal income tax administration. This clarification not only alleviates immediate concerns among content creators about potential new tax burdens but also illustrates the nuanced understanding required to navigate the digital economy’s regulatory landscape. FIRS stance is both the legal and pragmatic position to take, considering Nigeria’s current realities [perhaps CAC can learn from them].

Although, in some developed digital economies, where government has invested in growing innovation and with increased digital economy activities such as Singapore, if you are involved in repeated or habitual blogging-related activities result in an annual net business income of more than $6,000, you will have to declare this as self-employed income, you do not have to register as a business by compulsion. Nigeria in the future can learn from this, but for now, FIRS position is pragmatic and viable.

Regarding Opay’s role in this unfolding scenario, the company’s engagement with the CAC, aiming to regularize 300,000 agents and merchants, is a monumental task that underscores the fintech giant’s commitment to formalizing the informal sector. However, the communication and government relations strategy surrounding these efforts needs critique.

The portrayal of Opay’s involvement in facilitating business registration and potentially expanding the tax net could inadvertently align the brand with an “anti-people” sentiment, especially if perceived as enforcing unpopular regulatory measures without adequate public sensitization or dialogue.

To mitigate such perceptions, Opay, and indeed any fintech or digital platform operating in similar capacities, must prioritize transparent, empathetic communication that highlights the mutual benefits of compliance and registration.

The rule is: “Have your GR comms materials ready for release before and after each visit, do not leave it in the hands of government and media [especially some Nigerian media outlets that tends to sensationalize headlines]. Not only does this approach foster a more cooperative relationship between digital platforms and their users, but it also positions these companies as partners in progress, working alongside government agencies to enhance economic inclusiveness and stability.

In addressing the complexities of digital economy regulation, the role of the 14-member National Council for Digital Innovation and Entrepreneurship (NCDIE) becomes paramount. Inaugurated by President Muhammadu Buhari under the Startup Act, with the Vice President serving as its head, the NCDIE is strategically positioned to influence these matters significantly.

The council consists of a diverse group of stakeholders, including representatives from federal ministries such as Finance, Digital Economy, and Education, as well as members from the private sector, academia, and the startup ecosystem. This composition ensures a holistic approach to digital innovation and entrepreneurship, enabling the council to provide comprehensive guidance and support on regulatory issues that impact digital content creators and the broader tech community.

The NCDIE’s involvement is crucial in ensuring that regulations like those proposed by the CAC and tax considerations by the FIRS are pro-innovation and align with the overarching goals of fostering a supportive environment for digital innovation and entrepreneurship in Nigeria. The NCDIE must wake up the sleeping giant in her!

Timi Olagunju has 12+ years experience in the intersection of technology, law, and policy. He is a Partner Groundswell and Associate Partner, The Timeless Law Practice. He tweets @timithelaw

The post Can CAC Tax Content Creators? appeared first on Tech Digest News.

The Corporate Affairs Commission has urged social media content creators, Instagram users, and TikTok users with large followers to register their businesses with the commission in accordance with the Company and Allied Matters Act 2020.

This is coming amidst alleged plans by the Federal Inland Revenue Services to onboard media content and influencers into its tax system.

The Registrar General, CAC, Hussaini Magaji, made the call recently, when he was paid a courtesy visit by the Managing Director, Opay, Dauda Gotring, and his team in Abuja.

The visit from the Opay team was to ensure the regularisation of 300,000 agents and merchants with the commission.

This will expand the tax net, encourage businesses, and create more jobs for Nigerians.

Last week, the commission began the registration of two million small businesses in partnership with Moniepoint, a fintech company.

The CAC boss stated that social media and content creators are generating a lot of money without paying any form of tax to the Federal Government.

Magaji said, “Ignorance of the law is not an excuse. It is stated in the Company and Allied Matters 2020 that for any business to take place in Nigeria, whether you are doing business with your name or another name, you must surrender your business for registration.

” If you are a content creator on the internet and you have a large followership and you are gaining or making money from it, you must register and that’s the provision of the law.

“And we are all out to enforce the provision of the law with its penalties.”

He added that the commission will soon begin compliance checks to ensure these businesses start paying their taxes to the government.

He added, “This cannot go on, these groups of people are under mandate to register as a business considering the amount they make from the content creation. The government is all out to ensure every business in Nigeria, no matter what or how, is registered with the CAC.

“The commission is registering another batch of 300,000 business names from Opay.”

The CAC boss said the initiative is part of his target to register 20 million businesses in 2024 and 50 million jobs target for Nigerian youths.

On his part, the Opay MD noted that the idea behind Opay operations is to deliver banking services to the unbanked persons in the country.

“Opay is ready to partner with CAC to ensure these groups of people have their businesses registered, with their consent though,” he said.

Gotring said the Opay organisation is working to ensure that all companies no matter how little, as long as you operate as a business you should be registered with the CAC.

He added that since Opay handles, “these accounts they are working on sensitising the owners of the accounts so they can be registered with CAC.”

The post Content Creators must register, pay taxes – CAC appeared first on Tech Digest News.