FG: Foreign companies with revenue above N25m will pay tax

Foreign companies operating in the country will be liable to tax if they derive an income of at N25 million or its equivalent in other currencies.

The federal government has gazetted the provisions of the finance act that amended Nigeria’s tax laws.

The act was signed into law by President Muhammadu Buhari on January 15 and a gazette seen by TheCable was published on February 10, 2020.

One of the amendments to the companies income tax act states that: “All non-resident companies earning income from advertising, marketing, social media platforms etc would be subject to tax on profits realised in Nigeria”.

“A foreign entity involved in digital transactions will be deemed to have created a simplified employee pension (SEP) in Nigeria and therefore liable to tax if it derives income of N25 million or equivalent in other currencies from Nigeria in a year, uses Nigerian domain name (.ng) or registers a website address in Nigeria.

According to the gazette, the company would also be liable to tax if it “has purposeful and sustained interactions with persons in Nigeria by customising its digital platform to target persons in Nigeria eg by stating the prices of its products or services in naira”.

The gazette captures revenue generated from streaming or downloading of digital contents, transmission of data collected about users in Nigeria, provision of goods or services directly or through a digital platform intermediation services that link suppliers and customers in Nigeria.

It also states that companies would be covered by any multilateral agreement to which Nigeria is a party and will be treated in accordance with the agreements.

The gazette exempts payments to employees of a foreign entity or teaching in an educational institution are exempt.

Featured image: Zainab Ahmed, minister of finance, budget and national planning