The Federal Government of Nigeria has revealed that it is set to explore legal provisions empowering it to collect taxes on profits made by global technology and digital firms not based in Nigeria, but having significant economic presence in the country.
Vice President Yemi Osinbajo, made this revelation when he interacted with a delegation of the Chartered Institute of Taxation of Nigeria (CITN), led by its President, Mr Adesina Adedayo who paid him a courtesy visit at the Presidential Villa in Abuja.
He said while the Federal Government will not be raising tax rates at this time, based on the Finance Act 2019, it was already empowered to widen the tax net.
This, the FG said, includes taxes on the Nigerian income of global giants with significant economic presence, even if they have not set up presence or permanent establishment and are currently not paying taxes in the country.
According to him, Section 4 of the Finance Act 2019, provides that ‘the Minister (Finance) may by order (of the President) determine what constitutes the significant economic presence of a company other than a Nigerian company.’
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Prof. Osinbajo continued, ‘we have had severe economic downturns which of course implies that we may not be able to collect taxes with the aggressiveness that would ordinarily be expected.
‘I think the most important thing is that we must widen our tax net so that more people who are eligible to pay tax are paying. Several efforts have been made, and I am sure you are aware of the initiatives including the Voluntary Assets and Income Declaration Scheme (VAIDS) which was also an attempt to bring more people into the tax net, including those who have foreign assets.’
He further said ‘we have also recently taken a step with respect to a lot of the technology companies that are not represented here but who do huge volumes of business here.
‘The Finance Act has shown that we are very prepared to ensure that these big technology companies do not escape without paying their fair share of taxation in Nigeria. Many of them do incredible volumes here in Nigeria and in several other parts of the region.
‘We have drawn up the regulations and we are prepared to go, and I think that we are at least in a good place to tap into some of the tax resources we can get from some of these companies.’
Africa Today News, New York recently sighted a Bloomberg news article reported that ‘Governments around the world are grappling with how to modernize their legal frameworks to account for the global reach of the digital economy, reshaping how policymakers think about issues as varied as monopoly power, taxation and workers’ rights.’
Also, international talks are currently ongoing in Paris on global standard rules for governments to receive taxes from such digital and technology firms with significant economic presence in foreign countries.
AFRICA TODAY NEWS, NEW YORK