There are reports that the Federal Government plans to tax foreign digital service providers offering services to Nigerians and earning revenue in naira.
PUNCH reports that some of these service providers which are video streaming sites, social media platforms, and companies that offer downloads of digital contents will now pay digital tax to the Federal Inland Revenue Service.
This comes as the Minister of Finance, Zainab Ahmed issued the Companies Income Tax (Significant Economic Presence) Order, 2020 as an amendment of the Finance Act 2019
Some of the foreign companies that offer digital video and advertising services to Nigerians include Netflix, Facebook, Twitter, Alibaba, Amazon among others.
The new regulation would apply to companies with income of N25m or equivalent in other currencies from Nigeria in a year and those with a Nigerian domain name (.ng) or a website address in the country.
However, payments made to employees of a foreign entity or for teaching in an educational institution are exempted.
Analysts at PricewaterhouseCoopers said some of the affected foreign digital companies would be required to register for income taxes in Nigeria and file annual tax returns even if they did not have a physical presence in Nigeria.
According to the consulting firm, the problem will also be exacerbated where the companies sell their products and services directly to individual consumers in Nigeria.