Experts in the telecommunications industry have said the federal government’s decision to tax social media companies is just because the companies generate commercial revenue for the nation.
According to Meta, a 7.5% value-added tax will be applied on sales of ads to advertisers from January 2022, and this will apply to all non-resident businesses that provide digital services in the country.
The company spokesperson said, âStarting in the new year, Nigeria will be implementing a new value added tax. This law requires all non-resident businesses that provide digital services to charge an additional 7.5% tax. This includes advertising services like those of Facebook.
âFacebook is required to charge VAT on the sale of ads to advertisers, whether you buy ads for business or personal use. All advertisers with a business in Nigeria will be charged an additional 7.5% VAT on advertising services purchased as of January 1, 2022. As with all VATs, businesses like Meta will collect this tax on behalf of the Nigerian government.
Affordable Internet Alliance national coordinator Olusola Teniola noted that the FG’s decision was aimed at increasing its income through taxes.
He said: âEverything is under the auspices of the government which is trying to increase its revenues. There has been a debate, even among OECD countries, on how they can achieve taxation of digital businesses.
âAnd there was an agreement that there should be a tax model adopted. The problem here is that Africa is the weakest partner among the OECD countries. So when the developed countries that are part of the OECD agreed to tax up to about 15 percent of the income generated by their countries, they did not take into account the income generated by African countries.
âThus, each country must design a method allowing it to estimate the amount of tax owed to it from the transactions carried out on these platforms. Recently there was an agreement that any transaction on these platforms will incur a tax. ”
According to Teniola, Nigeria’s approach is very similar to that of Ghana.
He added: âI think Ghana also imposes a tax not only on social media transactions, but on many other such transactions.
“But for us as an industry, we have to find a way to involve the government on a way to mitigate the effect on consumers.”
He said that since VAT would naturally pass to the consumer, a way to cushion that impact, especially as the increase in digital transactions continued, needed to be adopted as well.
National Association of Telecommunications Subscribers President Adeolu Ogunbanjo said, âOne of the things the federal government has said to social media companies is how to tax them. Facebook is used for advertisements, for commercial purposes, which calls for a kind of tax, which of course is one of the duties of this government: to widen the tax net.
“However, because we are using it for advertising, I think that decision is fair. And we have been informed from elsewhere. They made it clear to us – which is one of our rights – that there would have taxes and they would negotiate with the owners of these social media companies.I think that’s good because the federal government would have more revenue.
“We have to wait and see how the tax would be implemented before we criticize this decision.”
Recently, the Minister of Finance, Budget and National Planning, Zainab Ahmed, hinted at the introduction of new tariffs and levies as the country’s economy continues to recover in 2022.
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