Nigeria will prioritise tax collection from its digital economy in 2022 and focus on non-resident firms with significant economic presence that generate turnover in the West African country, the country’s tax chief said on Thursday.
Nigeria plans to tax digital non-resident companies that sell products to local customers at 6% of turnover, Finance Minister Zainab Ahmed said this month, as part of fiscal reforms to boost revenues and diversify the oil-dependent economy.
At around 4.5% of GDP, Nigeria has one of the lowest tax rates in the world, and has struggled to increase tax collection from its non-oil sector.
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The government has said it wants to modernise taxes for its digital economy and to improve compliance.
“We will implement the published guidelines … to collect VAT on digital supply of services and intangibles to Nigeria,” Muhammad Nami, executive chairman of the Federal Inland Revenue Service (FIRS), said in a statement.
Digital services include apps, high frequency trading, electronic data storage and online advertising, the minister has said.
The World Bank said last year that Nigeria needed to boost non-oil taxes to at least 12.75% of gross domestic product to boost growth.
The FIRS has deployed a digital interface to facilitate implementation and also determine companies that generate relevant turnover from Nigeria, Nami said.