Nigeria is turning a new page in its economic story. Once reliant on oil, the country is now leaning on taxes to fund its future. With a ₦19.4 trillion target for 2024, taxes have become the main source of revenue, supporting public services and driving growth.
In the first nine months of 2024, foreign companies operating in Nigeria, including giants like Google, Netflix, and Facebook, paid a total of ₦3.85 trillion in taxes—an impressive 68% increase compared to the ₦3.29 trillion collected during the same period in 2023. This revenue is generated from two main sources: Company Income Tax (CIT) and Value Added Tax (VAT).
The rise in tax collections is attributed to more effective tax enforcement by the Federal Inland Revenue Service (FIRS). According to the National Bureau of Statistics, CIT alone grew by 59.52%, reaching ₦2.57 trillion, while VAT saw an astounding increase of 157%, totaling ₦1.28 trillion. This growth reflects a significant push to capture taxes from digital companies that operate without physical offices in Nigeria.
For instance, platforms like Netflix and Facebook, which provide digital content and advertising to Nigerian users, are now paying taxes based on the revenue they earn from the country. Although these companies don’t have physical locations in Nigeria, they still contribute to the economy by offering services to millions of Nigerians. In recent years, Nigeria has enforced tax collection on such foreign companies, beginning in 2020.
The impact of this taxation is clear. Google, LinkedIn, and Meta have already met their tax obligations, and the government expects even higher revenue as more platforms comply. However, some companies, like TikTok and X (formerly Twitter), are yet to fulfill their tax requirements.
With tax revenues now the backbone of Nigeria’s economy, this growth is essential for funding public services and ensuring the stability of government operations nationwide.
