The disclosure was made on Wednesday, September 10, by Mr. Mathew Osanekwu, Special Adviser on Tax Policy to the Chairman of the Tax Reforms Committee, during a workshop for media practitioners in Abuja.

Osanekwu explained that under Section 10 of the VAT Act, foreign firms are now registered in Nigeria and serve as collection agents for the Federal Government.

“These are not Nigerian entities, but they are now paying VAT under Section 10 of the VAT Act. They are registered in Nigeria and are also appointed as agents of collection,” he said, describing the measure as one aligned with global best practices to ensure the country benefits from services consumed locally but delivered by foreign providers.

At the same event, the Federal Government moved to calm public concerns over possible new levies. The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Professor Taiwo Oyedele, stressed that President Bola Tinubu’s fiscal reforms have not introduced any new taxes.

“It’s not a new tax. Some said the tax is being proposed. The tax is not being proposed. Some believe this president has introduced tax after tax, and I challenge them to point to one newly introduced tax,” Oyedele said.

He recalled that in July 2023, President Tinubu signed four executive orders suspending levies imposed in the final days of the Buhari administration, including excise duties on plastics and vehicle imports. He also clarified that the controversial Cybersecurity Levy was legislated years earlier and not introduced by the current administration.

Oyedele said the reforms, due to commence in January 2026, are designed to overhaul Nigeria’s fragile tax system, broaden the revenue base, and strengthen compliance. With Nigeria’s tax-to-GDP ratio at 10.8 percent—far below the African average of 16 percent—he argued that consolidation of multiple levies will eliminate overlaps and tie taxes directly to projects.

Under the reforms, Nigerians earning less than ₦800,000 annually will be exempt from personal income tax, while small businesses with an annual turnover below ₦100 million will pay zero corporate tax.

“This reform is the most progressive Nigeria has ever seen. It eliminates taxes on the poor, reduces the burden on the middle class, and targets higher-income earners fairly,” Oyedele said.

He, however, painted a bleak picture of the fiscal situation inherited in May 2023, warning that foreign reserves weighed down by subsidy debts and crude pre-sales had left the economy “running on fumes.” Without subsidy reforms, he said, Nigeria risked facing a fuel import collapse similar to Sri Lanka’s crisis.

The post Nigeria Taps Big Tech for ₦600bn VAT Haul appeared first on Tech Digest News.

Amid the ongoing debate surrounding the Tax Reform Bill 2024, a fact-check by PRNigeria has confirmed that President Bola Ahmed Tinubu and Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, previously opposed a proposal to increase Value-Added Tax (VAT) during former President Muhammadu Buhari’s administration.

Recent social media posts have circulated screenshots alleging Tinubu and Oyedele were vocal critics of the Buhari administration’s VAT hike plans. One of the posts features a bold caption: “Tinubu opposes the Buhari administration’s plan to increase VAT.” The resurgence of these claims comes as the Tax Reform Bill 2024, which proposes increasing VAT from 7.5% to 15% by 2030, sparks public scrutiny.

Tinubu’s Opposition in 2019

During his 67th birthday colloquium on March 28, 2019, held at the International Conference Centre in Abuja, Tinubu, then the National Leader of the All Progressives Congress (APC), publicly opposed the proposed VAT hike. He stated, “An increase in VAT will reduce the purchasing power of Nigerian consumers and is capable of increasing hardship in the country.” Tinubu urged the then Vice President, Yemi Osinbajo, who chaired the National Economic Council (NEC), to reconsider the proposal.

Mainstream media outlets widely reported Tinubu’s remarks, with headlines emphasizing his resistance to the VAT hike, such as “Tinubu Kicks Against Proposed Increase in VAT.”

Oyedele’s Opposition on Social Media

Taiwo Oyedele, a tax expert and then a private sector professional, also opposed the proposed VAT increase. In a series of tweets, he criticized the plan, stating that it was poorly timed and inconsistent with Nigeria’s economic realities. He warned that an increase without mechanisms like a registration threshold and the zero-rating of basic goods would disproportionately burden the poor and small businesses.

Oyedele specifically criticized the Federal Inland Revenue Service (FIRS) under Babatunde Fowler, which had suggested raising VAT from 5% to between 7.25% and 8.75%. His comments aligned with principles outlined in the 2017 National Tax Policy, which aimed to protect vulnerable populations.

The Current Debate

The resurfaced criticisms have reignited discussions about fiscal policies and alleged inconsistencies in President Tinubu’s approach to tax reforms. The Tax Reform Bill 2024, currently at its second reading in the National Assembly, proposes a phased VAT increase and other fiscal adjustments. While Oyedele, now Chairman of the Tax Reform Committee, was initially quoted as supporting a 10% VAT hike, he later denied such plans, stating that the Federal Government has no intention of increasing VAT.

PRNigeria’s Verdict

Following its investigation, PRNigeria confirmed that both Tinubu and Oyedele opposed the VAT hike during Buhari’s administration. The fact-check involved reverse image searches and reviews of media reports, which corroborated the claims.

Conclusion: The assertion that Tinubu and Oyedele opposed the VAT increase during Buhari’s tenure is accurate. Their positions, widely reported at the time, were consistent with their advocacy for policies that protect the poor and promote economic stability.

The post Tinubu, Oyedele Opposed Buhari’s VAT Increase Plan, PRNigeria Confirms appeared first on Tech Digest News.

TECHDIGEST – The Federal Government of Nigeria has projected to generate N136.3 billion as revenue from Electronic Money Transfers (ETM) to be paid by bank customers in 2023. This is based on a projected 2.7 billion volume of eligible online transfers in the year.

The Budget Office of the Federation, which disclosed this in its 2023-2025 Medium Term Expenditure Framework and Fiscal Strategy paper released on Friday, said the recently approved Regulations governing the administration of the Electronic Money Transfer Levy (EMTL) is expected to boost collections of the revenue.

The government said it would also ensure proper monitoring of banks and other financial institutions to conduct reconciliation and to ensure deduction and remittance of the levy.

The revenue projection from the EMTL for next year is, however, lower than the current year’s target of N209.7 billion as set in the amended 2022 framework. In 2021, the government had projected N500 billion revenue from the levy but realised N111.84 billion at the end of the year.

The EMT levy was introduced in the Finance Act 2020, which amended the Stamp Duty Act and taps into the growth in electronic funds transfer in Nigeria.
The N50 levy is charged on electronic transfer of money deposited in any bank or financial institution, on any account, on the sum of N10,000.00 or more.
The revenue derived from the EMT levy is shared based on derivation and distributed at 15% to the Federal Government and Federal Capital Territory, 50% to the state governments, and 35% to the 774 local governments.

Painting the two possible scenarios that may affect the government’s revenue and expenditure for next year, the Budget Office said the first scenario is ‘the Business-as-Usual scenario, which assumes that the subsidy on PMS will be sustained throughout 2023, amounting to N6.72 trillion.

“Based on this, the net amount accruable to the Federation Account is projected at N7.76 trillion. The Main Pool, VAT Pool, and Electronic Money Transfer Levy (EMTL) are projected at N4.89 trillion, N2.74 trillion, and N136.35 billion, respectively, in 2023. Oil revenue at N498.06 billion is a negligible 6.4% of total Federation Account receipts as it will be eroded by the fuel subsidy.

“Other components of the Main Federation Account revenues include Corporate Tax – N1.92 trillion, Customs Revenue – N1.96 trillion, Special Levies – N344.72 billion, NLNG Dividend – N153.73 billion, and Solid Minerals – N7.51 billion. The share of the Federal Government from the Main Federation Account Pool will be N2.57 trillion, while the States and Local governments are projected to get N1.31 trillion and N1.01 trillion, respectively, in 2023.

“From the VAT Pool, the Federal Government is projected to receive N410.46 billion, the States N1.37 trillion, and the Local governments N957.73 billion. The shares of EMTL are N20.45 billion, N68.17 billion and N47.72 billion, respectively, for the Federal States and Local governments,” it said.

Under the second scenario which the Budget Office described as ‘Reform scenario’, it is assumed that the PMS subsidy will end by June 2023, in line with the government’s 18-month extension announced at the beginning of 2022. “Based on this assumption, the net amount accruable to the Federation Account is projected to be higher at N11.10 trillion,” it added.

Source: Nairametric 

The post FG Targets N136.3 Billion Revenue From Electronic Money Transfers In 2023 appeared first on Tech Digest News.

TECHDIGEST – Beginning this quarter of 2022, the Nigerian government plans to charge 6% tax on turnover on e-commerce businesses provided by non-resident companies in Nigeria. This brings the government’s tax lens over non-resident companies like Amazon and a host of other e-commerce platforms, large and small, offering web or mobile based transactions to Nigerians.

According to the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, in a breakdown of the 2022 budget this week in Abuja, services to be taxed include various apps, electronic-data storage, online advertising and such other similar digital services by foreign companies.

Abuja is widening its tax net over non-oil revenue. “Digital-services tax is one of the measures government is introducing to help boost public revenue amid “emerging fiscal constraints and challenges” notes a report by Bloomberg Tax.

The new tax regime is covered by the 2021 Finance Act, which empowered the Federal Inland Revenue Service (FIRS) to access Company Income Tax (CIT) on the turnover of a foreign digital company involved in transmitting, emitting, or receiving signals, sounds, messages, images, or data of any kind including e-commerce, app stores, and online adverts.

“Section 30 of the Finance Act designed to amend section 10, 31 and 14 of value-added tax (VAT) is in relations to VAT obligations for non-resident digital companies and the mechanism that will be used is to restrict VAT obligations mainly to digital non-resident companies who supply individuals in Nigeria who can’t themselves self-account for VAT.

“So, if you visit Amazon, we are expecting Amazon to add VAT charge to whatever transaction you are paying for. I am using Amazon as an example. We are going to be working with Amazon to be registered as a tax agent for the FIRS,” said Ahmed during the public presentation.

She said government remains committed to modernising taxes, ensuring compliance in line with the global digital economy and best practice.

Highlights of the new tax

Digital non-resident companies not required to be registered locally but must maintain a working arrangement with the FIRS to collect and remit taxes in order to reduce compliance burden.

Tax regime empowers the FIRS to assess Non-Resident Firms to tax on Fair & Reasonable Turnover Tax Basis on Turnover earned from providing Digital Services to Nigerian customers.

Tax regime introduced Turnover Tax on Fair & Reasonable Percentage of Profits earned from providing Digital Services to Nigerian customers.

VAT obligations restricted mainly to Digital Non-Resident Companies (who supply individuals who cannot self-account for VAT).

Tax regime is expected to reduce the compliance burden on other Non-Resident Taxpayers who are not required to register for VAT in Nigeria.

Source: itedgenews.ng

The post By Law, Digital Non-Resident Companies Now To Pay 6% Tax In Nigeria appeared first on Tech Digest News.

TECHDIGEST – Facebook (now Meta) has issued a notification that Nigerians will pay 7.5 percent value-added tax (VAT) on all ad placements from January 1, 2022.

The social media giant said this in a statement issued on Thursday.

According to the statement, the charge will apply to those buying ads for businesses or personal purposes.

“Due to implementation of a value-added tax (VAT) in Nigeria, Facebook is required to charge VAT on the sale of ads to advertisers, regardless of whether you’re buying ads for business or personal purposes,” the statement reads.

“All advertisers with a business country of Nigeria will be charged an additional 7.5% VAT on advertising services purchased beginning 1 January 2022.

The statement added that those exempted from VAT would be able to recover the fund if they provided their tax ID.

“If you’re registered for VAT and provide your VAT ID, your VAT ID will show up on your ads receipts,” it added.

“In the event that you’re entitled to recover the VAT, this may help you recover any VAT you paid to the Nigerian tax authorities if you are a VAT registered business in Nigeria.”

Facebook (now META) is the parent company of Instagram, FB Messenger, and Facebook social media channel.

According to the TheCable’s report, the new 7.5 percent VAT charge will also apply to Instagram ads.

The federal government is currently working on modalities to tax the digital economy and improve revenue. President Muhammadu Buhari had transmitted the 2021 Finance Bill to the national assembly.

Provisions of the bill empowers the Federal Inland Revenue Service (FIRS) to assess and charge companies income tax (CIT) on any digital company with a significant presence in the country, such as Facebook, Twitter, AliExpress, others.

If passed into law, it will increase government revenue and widen the tax net in a cash-strapped economy.

The post Nigerians Will Pay 7.5% VAT On Facebook Ads appeared first on Tech Digest News.