BY LEVI JOHNSON
Nigeria Vice President, Professor Yemi Osinbajo, Senior Advocate of Nigeria has vowed that the Federal Government would henceforth collect taxes on profits made by global technology and digital firms not based in Nigeria, but have a business presence here.
According to Osinbajo, the Federal Government is set to utilize legal provisions to that effect.
The Senior Advocate made it clear when he interacted with a delegation of the Chartered Institute of Taxation of Nigeria, CITN, led by its President, Mr Adesina Adedayo who visited the Presidential Villa, Abuja on Friday.
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.
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.”
Osinbajo’s words: “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.
“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.
Besides, a recent 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.”are those who argue that “our tax rates are too low, comparing us to other places in the region where the rates are much higher.”
The government, under the Finance Act 2019, has reduced taxes for small companies – companies with less than N25 million in annual turnover are charged Zero Company Income Tax, CIT.
Also, CIT for Companies with revenues between N25 and N100m (described in the Act as “medium-sized” companies) has been reduced from 30% to 20%. Besides, Nigerians making minimum wage income are not to pay tax at all.
Under the 2020 Finance Act, there is also an exemption of small companies from payment of education tax under the Tertiary Education Trust fund (TETFUND)-meaning companies with less than N25m turnover are eligible
Similarly, there is a 50% per cent reduction in minimum tax; from 0.5 per cent to 0.25 per cent for gross turnover for financial years ending between January 1st, 2020 and December 31st, 2021
Welcoming the delegation, the Vice President emphasized the need for regular interaction between the council and government to address issues bothering on tax legislation, noting that “there is need for continuous engagement with the National Assembly because engagement with the government cannot be a one-off thing.”
Prof Osinbajo added that the government has over the past few years, initiated programmes aimed at improving the growth of small businesses including the formalization of many of them. Under the Economic Sustainability Plan (ESP), there is a formalization of 250,000 businesses.
He said the ongoing MSME Week has encouraged many businesses to register with regulatory authorities in order for them to benefit from the numerous programmes earmarked by the government for their growth.
Earlier in his remarks, the President of CITN, Adedayo, commended the government in the implementation of key government interventions in the economy, stating that “we acknowledge your great zeal and commitment to Nigeria project.”
He said the visit became necessary given the enormous work the administration has done towards addressing the huge fiscal challenges in the polity, public financing reforms, and sustained efforts towards addressing infrastructural deficit across the country.
His words: “the Nigerian Economic Sustainability Plan (NESP) and other measures implemented was a right response to the challenges posed by COVID-19 pandemic and were largely instrumental to creating buffers for the government at all levels in withstanding the pressures and waves created during the peak period and the aftermath of COVID-19.
“It is important that we sustain measures already being implemented to improve tax collection at all levels.”
