In the first nine months of 2024, major foreign companies like Google, Netflix, and Facebook paid a total of 3.85 trillion naira in taxes to the Nigerian government. This amount is a significant increase of 68.12% from the 2.29 trillion naira collected during the same period in 2023, according to a report by DANDALI.
This 3.85 trillion naira figure includes two main types of taxes: Company Income Tax (CIT) and Value Added Tax (VAT). The National Bureau of Statistics shared this information on Tuesday.
Breaking it down further, the report shows that the tax payments improved over the quarters. In the first quarter of 2024, the government collected 1.03 trillion naira, which rose to 1.52 trillion naira in the second quarter, and then reached 1.3 trillion naira in the third quarter. Overall, the CIT collected from January to September 2024 amounted to 2.57 trillion naira, which is a 43.65% increase compared to 1.79 trillion naira collected during the same time last year. VAT collections also saw a remarkable rise, reaching 1.28 trillion naira, which is an increase of 157.03% from 498.34 billion naira in 2023.
To explain the taxes a bit more: Company Income Tax is 30% of a company’s profits, while Value Added Tax is a 7.5% charge added to the price of goods and services that consumers pay when they buy something.
Looking at how these taxes came in each quarter, for CIT, the earnings went from 598.13 billion naira in the first quarter to 1.12 trillion naira in the second quarter, and then dropped slightly to 852.29 billion naira in the third quarter. For VAT, the collections were 435.73 billion naira in the first quarter, 395.74 billion naira in the second quarter, and then increased to 448.85 billion naira in the third quarter, which is a small rise of 3.01%.
In 2020, the Nigerian government started efforts to tax foreign digital service providers that earn money in Nigeria, recognizing the popularity of their services among the local population. This includes companies that offer streaming services, social media, and digital content downloads. These companies, like Netflix and Facebook, have been providing their services in Nigeria without having a physical office in the country. They earn money by selling video content, advertising, and other digital services to Nigerian users.
There is potential for even more tax revenue as more of these digital platforms begin to comply with Nigerian tax laws. Recently, the National Information Technology Development Agency noted that TikTok and X (previously known as Twitter) have not yet met their tax filing requirements, while companies like Google, LinkedIn, and Meta have fulfilled their tax obligations according to Nigerian regulations.
Earlier this year, the former Accountant-General of Nigeria, Oluwatoyin Madein, stated that tax revenue has become the country’s largest source of income. She mentioned that the federation account allocation committee is eagerly awaiting the monthly tax revenue figures because these funds are essential for distributing money among the three levels of government in Nigeria.
The Federal Inland Revenue Service (FIRS) has been given a target of 19.4 trillion naira to collect in taxes for 2024, and they have already remitted over 18.5 trillion naira so far. This shows how important tax revenue is for the government’s budget and spending plans.
