In a significant development for Nigeria’s tax revenue, foreign companies operating in the country, including tech giants such as Google, Netflix, and Facebook, have remitted a total of N3.85 trillion in taxes to the Federal Government in the first nine months of 2024.
This represents an impressive 68.12 per cent increase from the N2.29 trillion collected in the same period in 2023.
The revenue, which includes Company Income Tax (CIT) and Value Added Tax (VAT), was revealed in a report issued by the National Bureau of Statistics on Tuesday.
According to the data, tax collections surged steadily throughout the year. In the first quarter of 2024, Nigeria earned N1.03 trillion, which rose to N1.52 trillion in the second quarter, and further increased to N1.30 trillion in the third quarter.
A significant portion of this revenue came from CIT, which accounted for N2.57 trillion—up by 43.65 per cent compared to the N1.79 trillion collected in the same period of 2023.
VAT collections also saw substantial growth, reaching N1.28 trillion, an increase of 157.03 per cent from the N498.34 billion collected in 2023. This jump reflects the success of Nigeria’s improved tax collection efforts.
The Federal Inland Revenue Service (FIRS) explained that CIT is a 30 per cent tax on companies’ profits, while VAT is a 7.5 per cent consumption tax paid by the final consumer when goods are purchased or services are rendered.
On a quarterly basis, CIT earnings showed a marked improvement, climbing 42.49 per cent from N598.13 billion in Q1 to N1.12 trillion in Q2, before slightly dipping to N852.29 billion in Q3. VAT collection was more stable, earning N435.73 billion in Q1, N395.74 billion in Q2, and N448.85 billion in Q3, a 3.01 per cent increase.
The report highlights the growing importance of tax revenue in Nigeria’s economy. Since 2020, the Federal Government has been focusing on collecting taxes from foreign digital service providers operating in the country. These companies, such as Netflix, Facebook, and Twitter, have benefited from Nigeria’s large and growing digital market but had previously avoided tax obligations due to their lack of physical offices in the country.
As part of the tax collection drive, the government began imposing a digital tax on companies offering video streaming, social media platforms, and digital content services. This tax is expected to increase further once more foreign firms comply with the regulatory framework.
Despite some platforms, like TikTok and X (formerly Twitter), failing to meet tax filing requirements, others, including Google, LinkedIn, and Meta, have fully complied with the tax obligations as per Nigeria’s Code of Practice for Interactive Computer Service Platforms and Internet Intermediaries.
This growth in tax collections is particularly significant in light of earlier statements from former Accountant-General of the Federation, Oluwatoyin Madein, who revealed that tax revenues have now become the nation’s highest source of income.
As a result, members of the Federation Account Allocation Committee eagerly anticipate the monthly revenue reports from the FIRS, as these funds are essential for distribution among the federal, state, and local governments.
In line with its ambitious revenue goals, the government set a tax collection target of N19.4 trillion for 2024, with the FIRS already having exceeded N18.5 trillion in remittances for the year.
The substantial growth in tax revenue underscores Nigeria’s efforts to improve its fiscal health through increased tax compliance, especially from foreign digital service providers.
This is expected to provide further stability and growth for the country’s economy in the years to come.
