Yemi Osinbajo, vice president, has revealed that the Federal Government is working to utilize its legal provisions to collect taxes on profits made in the country by global technology and digital firms not based in Nigeria.
Osinbajo said this on Friday, while interacting with a delegation of the Chartered Institute of Taxation of Nigeria (CITN), led by its president, Adesina Adedayo, who visited him at the Presidential Villa.
While noting that the federal government will not be raising tax rates at this time, based on the Finance Act 2019, Osinbajo said it is already empowered to widen the tax net, including through the collection of taxes on the Nigerian income of global tech giants with significant economic presence in the nation, even if they have not established an office but are currently not paying taxes in the country.
According to the vice president, “in this regard, Section 4 of the Finance Act 2019, provides that the Minister (Finance) may by order (of the President) determine what constitutes the significant economic presence of a company other than a Nigerian company”, he stated.
“We have had severe economic downturns which of course implies that we may not be able to collect taxes with the aggressiveness that would ordinarily be expected.
“I think the most important thing is that we must widen our tax net so that more people who are eligible to pay tax are paying. Several efforts have been made, and I am sure you are aware of the initiatives including the Voluntary Assets and Income Declaration Scheme (VAIDS) which was also an attempt to bring more people into the tax net, including those who have foreign assets”.
Continuing, Osinbajo said: “We have also recently taken a step with respect to a lot of the technology companies that are not represented here but who do huge volumes of business here.
“The Finance Act has shown that we are very prepared to ensure that these big technology companies do not escape without paying their fair share of taxation in Nigeria. Many of them do incredible volumes here in Nigeria and in several other parts of the region.
“We have drawn up the regulations and we are prepared to go, and I think that we are at least in a good place to tap into some of the tax resources we can get from some of these companies”.
Besides the federal government, a recent Bloomberg report indicated that “governments around the world are grappling with how to modernize their legal frameworks to account for the global reach of the digital economy, reshaping how policymakers think about issues as varied as monopoly power, taxation and workers’ rights.”
Speaking further, Osinbajo noted that while the federal government has no plans to raise taxes now, adding that there are those who argue that “our tax rates are too low, comparing us to other places in the region where the rates are much higher”.
“So we have had to balance all of these issues because clearly, higher tax rates can be a disincentive to businesses and investments. In terms of domestic resource mobilization, we are trying to do the best we can, given the present circumstances and I believe that there is room for improvement.”
In his remarks, CITN president, Adedayo, commended the leadership of the vice president in the implementation of key government interventions in the economy, stating that “we acknowledge your great zeal and commitment to Nigeria project”.
He said the visit became necessary, given the enormous work the Buhari administration has done towards addressing the huge fiscal challenges in the polity, public financing reforms, and sustained efforts towards addressing infrastructural deficit across the country.
“The Nigerian Economic Sustainability Plan (NESP) and other measures implemented was a right response to the challenges posed by COVID-19 pandemic and were largely instrumental to creating buffers for the government at all levels in withstanding the pressures and waves created during the peak period and the aftermath of COVID-19,” Adebayo said.
“It is important that we sustain measures already being implemented to improve tax collection at all levels.”