The Federal Government plans to tax foreign digital service providers offering services to Nigerians and earning revenue in naira.
Some of these service providers which are video streaming sites, social media platforms, and companies that offer downloads of digital contents are expected to pay digital tax to the Federal Inland Revenue Service.
The Minister of Finance, Zainab Ahmed, had issued the Companies Income Tax Order, 2020 as an amendment of the Finance act 2019.
The order aimed to impose tax on a foreign entity with respect to certain services or digital transactions if it had a Significant Economic Presence in Nigeria.
It further stated that the finance minister may by order, determine what constituted SEP in Nigeria.
Netflix, Facebook, Twitter, among others are some of these foreign companies that offer digital video and advertising services to Nigerians.
Others like Alibaba and Amazon generate revenue from Nigeria by processing and transmitting data collected about users in Nigeria, provision of goods or services directly or through a digital platform or offer intermediate services that link.