On December 31, President Muhammadu Buhari signed Nigeria’s 2022 budget of N17.126 trillion and passed into law the Finance Bill. The law empowers the federal inland revenue service (FIRS) to access companies income tax (CIT) on the turnover of a foreign digital company involved in transmitting, emitting, or receiving signals, sounds, messages, images, or data of any kind including e-commerce, app stores, and online adverts.
This was highlighted by the Minister of Finance, Budget, and National Planning, Mrs. Zainab Ahmed, on Wednesday, during the public presentation and breakdown of the 2022 budget in Abuja.
What the minister said:
“Section 30 of the Finance Act designed to amend section 10, 31 and 14 of VAT is in relations to VAT obligations for non-resident digital companies and the mechanism that will be used is to restrict VAT obligations mainly to digital non-resident companies who supply individuals in Nigeria who can’t themselves self-account for VAT.
So, if you visit Amazon, we are expecting Amazon to add VAT charge to whatever transaction you are paying for. I am using Amazon as an example. We are going to be working with Amazon to be registered as a tax agent for the FIRS.”
She added that the government surpassed its collection target for its independent revenues last year. According to her, Nigeria collected independent revenues of N1.104 trillion as of November 2021, beating its target of N973.41 billion.
What you should know
The 6% tax collection means that Nigerians living in Nigeria who visit Amazon or any e-commerce site that are non-resident in the country will pay VAT on items purchased on such platform.
According to the minister, the non-resident digital companies are not mandated to be registered in Nigeria, but the FIRS will make an arrangement with them to collect and remit taxes to mitigate non-compliance issues.
She said the FIRS might appoint persons (including Non-Residents) for the tax collection if need be.