Foreign tech giants, including Google, Facebook, and Netflix, have contributed an astonishing ₦3.85 trillion in taxes to the Nigerian government in the first nine months of 2024.
This figure represents a 68.12% increase from the ₦2.29 trillion collected during the same period in 2023.
The data, obtained from the National Bureau of Statistics, also revealed steady growth in quarterly remittances, underscoring the success of Nigeria’s improved tax collection strategies.
Between January and September, Company Income Tax (CIT) alone accounted for ₦2.57 trillion, marking a 43.65% rise compared to ₦1.789 trillion in 2023.
Similarly, Value Added Tax (VAT) collections surged to ₦1.28 trillion, an impressive 157.03% increase from ₦498.34 billion recorded in the previous year.
According to the Federal Inland Revenue Service (FIRS), CIT is a 30% tax on company profits, while VAT is a 7.5% consumption tax borne by consumers.
Breaking it down further, CIT remittances rose quarterly by 42.49%, from ₦598.13 billion in Q1 to ₦1.12 trillion in Q2, before slightly dropping to ₦852.29 billion in Q3.
VAT collections also followed an upward trend, peaking at ₦448.85 billion in Q3.
The surge in tax revenue is credited to the Federal Government’s push to include foreign digital service providers in its tax net.
This policy, initiated in 2020, targeted companies earning revenue in naira while operating without physical offices in Nigeria.
Streaming platforms like Netflix, social media giants like Facebook and X (formerly Twitter), and e-commerce platforms like Amazon and Alibaba now pay taxes for services offered to Nigerians.
These digital businesses generate revenue from ads, data processing, and intermediary services linking suppliers and consumers in Nigeria.
While major platforms like Google, LinkedIn, and Meta have complied with Nigeria’s tax regulations, others such as TikTok and X are yet to meet their obligations.
According to the National Information Technology Development Agency (NITDA), these companies must align with the “Code of Practice for Interactive Computer Service Platforms and Internet Intermediaries.”
This regulatory framework, designed to ensure tax compliance and operational transparency, has bolstered the government’s ability to collect revenue from non-traditional sectors.
The former Accountant-General of the Federation, Oluwatoyin Madein, emphasized the critical role of taxes in Nigeria’s financial stability.
“Tax revenues today are the highest source of revenue accruing to the federation,” she said.
She noted that members of the Federation Account Allocation Committee eagerly anticipate monthly figures from the FIRS, as these funds are vital for distribution across all tiers of government.
Earlier this year, the government set an ambitious tax revenue target of ₦19.4 trillion for 2024, with over ₦18.5 trillion already remitted.
As Nigeria tightens its tax collection efforts, analysts predict even higher earnings when platforms like TikTok and X finally comply with regulatory requirements.
For Nigeria, these revenues bring much-needed relief in a time of economic challenges.
Experts believe the significant rise in tax remittances from foreign digital platforms is proof of Nigeria’s growing influence in the global digital economy.
This trend also highlights the increasing importance of technology in shaping Nigeria’s fiscal policy.
With more digital platforms joining the tax fold, the government’s reliance on oil revenue may continue to decline.
For now, the Federal Government has its eyes set on surpassing its revenue goals and strengthening the nation’s economy through diversified sources.
