FG’s VAT Drive Yields Huge Payoff, N600 Billion From Facebook And Others

Nigeria has successfully collected over N600 billion in Value Added Tax (VAT) from global digital service providers, including Facebook, Amazon, and Netflix, according to Mr. Mathew Osanekwu, Special Adviser on Tax Policy to the Chairman of the Tax Reforms Committee. He explained that recent amendments to the VAT Act have empowered the Federal Inland Revenue Service (FIRS) to include non-resident companies providing services in Nigeria in the tax net. “These are not Nigerian entities, but they are now paying VAT under Section 10 of the VAT Act. They are registered in Nigeria and appointed as agents of collection,” Osanekwu said during a media workshop in Abuja on Wednesday.

He noted that the initiative aligns with international best practices and ensures Nigeria receives taxes on services consumed locally, even when delivered by foreign companies.

At the event, the Federal Government also clarified that President Bola Tinubu’s ongoing fiscal and tax reforms have not introduced any new taxes, countering widespread speculation. Professor Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, stated that the reforms are intended to reduce the tax burden on low- and middle-income earners while promoting fairness. He emphasized that controversial levies, including the five percent fuel surcharge, are not new but existed under long-standing laws predating the current administration.

Oyedele reminded participants that in July 2023, shortly after taking office, President Tinubu signed executive orders suspending taxes hastily imposed during the previous administration, including excise duties on plastics and vehicle imports. He also clarified that the Cybersecurity Levy was enacted years ago and was not introduced by the current administration.

The tax reforms, set to take effect in January 2026, aim to overhaul Nigeria’s weak tax system, broaden the revenue base, and improve compliance. Nigeria’s tax-to-GDP ratio currently stands at about 10.8 percent, significantly below the African average of 16 percent and the global benchmark of 30 percent.

Oyedele highlighted that the reforms will consolidate multiple taxes, eliminate overlapping levies, and link charges to transparent, project-based spending. The framework is progressive, protecting vulnerable groups while fairly taxing higher earners. Under the new rules, individuals earning less than ₦800,000 annually will pay no tax on that amount, while small businesses earning under ₦100 million per year will benefit from a zero percent corporate tax rate. “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,” he said.

He also outlined Nigeria’s fiscal challenges prior to the reforms, describing the country’s economic state as “on the verge of collapse” as of May 2023. According to Oyedele, foreign reserves were heavily constrained by unpaid forward contracts and subsidy-related debts at the Nigerian National Petroleum Company Limited (NNPCL), leaving only about 200,000 barrels of free crude available. He warned that continuing to fund fuel subsidies through borrowed money tied to future crude production could have led to a complete shutdown of fuel imports, similar to the crisis experienced in Sri Lanka.

“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?” Oyedele asked.