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Nigeria to prioritise taxes from digital non-resident firms in 2022

Nigeria to prioritise taxes from digital non-resident firms in 2022
© Reuters. FILE PHOTO: Nigerian Finance Minister Zainab Ahmed attends the IMF and World Bank’s 2019 Annual Spring Meetings, in Washington, U.S. April 13, 2019. REUTERS/James Lawler Duggan//File Photo

ABUJA (Reuters) – Nigeria will prioritise tax collection from its digital economy in 2022 and focus on non-resident firms with significant economic presence that generate turnover in the West African country, the country’s tax chief said on Thursday.

Nigeria plans to tax digital non-resident companies that sell products to local customers at 6% of turnover, Finance Minister Zainab Ahmed said this month, as part of fiscal reforms to boost revenues and diversify the oil-dependent economy.

At around 4.5% of GDP, Nigeria has one of the lowest tax rates in the world, and has struggled to increase tax collection from its non-oil sector.

The government has said it wants to modernise taxes for its digital economy and to improve compliance.

“We will implement the published guidelines … to collect VAT on digital supply of services and intangibles to Nigeria,” Muhammad Nami, executive chairman of the Federal Inland Revenue Service (FIRS), said in a statement.

Digital services include apps, high frequency trading, electronic data storage and online advertising, the minister has said.

The World Bank said last year that Nigeria needed to boost non-oil taxes to at least 12.75% of gross domestic product to boost growth.

The FIRS has deployed a digital interface to facilitate implementation and also determine companies that generate relevant turnover from Nigeria, Nami said.

Source: Investing.com

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