The Federal Government has collected over ₦600 billion in Value Added Tax (VAT) from foreign digital service providers such as Facebook, Amazon, and Netflix, following reforms that brought non-resident companies into Nigeria’s tax net.
This was disclosed by Mr. Mathew Osanekwu, Special Adviser on Tax Policy to the Chairman of the Tax Reforms Committee, during a workshop for media practitioners in Abuja on Wednesday.
Osanekwu explained that amendments to the VAT Act empowered the Federal Inland Revenue Service (FIRS) to compel digital companies operating in Nigeria to register locally and collect VAT on transactions.
“These are not Nigerian entities, but they are now paying VAT under Section 10 of the VAT Act. They are registered in Nigeria and are also appointed as agents of collection,” he said.
Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Professor Taiwo Oyedele, stressed that the ongoing reforms are designed to ease the tax burden on low- and middle-income earners while improving fairness across the system, Punchng reported.
Responding to criticism over new levies, Oyedele clarified that many of the charges being debated, including the five per cent fuel surcharge and the Cybersecurity Levy, are not fresh taxes introduced by President Bola Tinubu’s administration.
“It’s not a new tax. Some believe this president has introduced tax after tax, and I challenge them to point to one newly introduced tax,” he said.
He reminded participants that in July 2023, barely two months after assuming office, Tinubu suspended four hastily introduced taxes from the previous administration, including excise duties on plastic products and vehicle imports.
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The tax reforms, set to take effect in January 2026, aim to simplify Nigeria’s tax structure, broaden the revenue base, and improve compliance. Nigeria’s current tax-to-GDP ratio of 10.8 percent remains one of the lowest in the world, compared to the African average of 16 percent and a global benchmark of 30 percent.
Under the new framework, personal income tax thresholds have been revised to exempt Nigerians earning less than ₦800,000 annually, while small businesses with earnings below ₦100 million will pay zero corporate tax. Large corporations and high-income earners, however, will be taxed more progressively.
The reforms also introduce consolidation of multiple levies, eliminate overlapping charges, and tie tax revenues to transparent, project-linked spending.
“This reform is the most progressive Nigeria has ever seen. It eliminates taxes on the poor, reduces the burden on the middle class, and targets higher-income earners fairly,” Oyedele said.
He also highlighted the economic difficulties President Tinubu inherited in May 2023, describing the fiscal system as “on the verge of collapse.”
With foreign reserves encumbered by unpaid forward contracts and subsidy-related debts at the Nigerian National Petroleum Company Limited, the country had only about 200,000 barrels of free crude available due to pre-sales.
Oyedele warned that continuing to fund fuel subsidies with borrowed money against future crude production could have forced Nigeria into a fuel import crisis similar to Sri Lanka’s.
“People may ask whether life is better now than it was two years ago. The right question is: would life have been better today if those reforms hadn’t happened?” he asked.
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Image Credit: Premium Times Nigeria
