Tax Boom in Nigeria: Google, Netflix, and Facebook Reap 158% Yield
Nigeria’s finance has seen a remarkable boom, with foreign companies paying a whopping N2.55 trillion in taxes in the first six months of 2024, marking a staggering 158.76% increase from N985.27 billion in the previous period, as reported by Sunday PUNCH.
This significant hike comes as a result of tax collections from foreign digital service providers, including Google, Netflix, Facebook, Twitter, Alibaba, and Amazon, who have been generating revenue from Nigeria by providing digital video and advertising services, processing and transmitting user data, and offering other services. These companies operate without a physical presence in the country, making the tax collection a new terrain for Nigeria.
The Companies Income Tax (CIT) and Value-Added Tax (VAT) collected by the National Bureau of Statistics (NBS) between January and June 2024 account for this remarkable increase. Of the total amount, CIT stood at N1.72 trillion, while N831.47 billion was collected as VAT. Breaking down the figures further reveals that CIT earnings surged 87.2% to N1.12 trillion in the second quarter alone.
A breakdown of the reports shows that these digital companies are contributing more to the Nigerian economy, accounting for 45.3% of the total amount collected in the second quarter. Furthermore, a glance at the quarterly earnings demonstrates that VAT collections witnessed a slight dip, decreasing from N435.73 billion in Q1 to N395.74 billion in Q2, indicating a reduction of N39.99 billion.
Wale Edun, Minister of Finance and Coordinating Minister of the Economy, highlighted the remarkable feat when he revealed that Nigeria’s revenue for the first quarter of 2024 leapt to N9.1 trillion, nearly double the amount recorded in the same period last year. Notably, this monumental growth has been achieved without increasing taxes.
The N2.55 trillion earned from these foreign digital giants marks a significant step for Nigeria’s economy, boosting revenue and paving the way for future growth. This trend bodes well for the country’s fiscal and economic outlook, setting it on a path for development and sustainability.