Nigeria Opens A New Playbook for Global Tech

Nigeria Opens A New Playbook for Global Tech

It is what it is – most global jurisdictions wrote their tax laws before the internet, and accordingly tax jurisdictions were not based on IP addresses but physical address. As a result of that, some technology companies which run their playbooks via  IP addresses could sell globally, and yet not pay taxes globally. Nigeria thinks that is not fair – and to a large extent, I agree with the nation.

So, the nation wants to do something about it: according to the Office of the Vice President, Nigeria will adopt a new playbook which will impose ” taxes on the Nigerian income of global tech giants with significant economic presence in the country, even if they have not established a physical office or permanent establishment and are currently not paying taxes in Nigeria.”

He added that while the Federal Government has no plans to raise taxes now, saying “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.

The plan is the easiest part, the most difficult component is actually making that happen. How do you tax Netflix if it fails to cooperate? Sure, you can ask Nigerian banks to keep 7.5% VAT on any credit or debit card domiciled in Nigeria which is used to pay for Netflix subscriptions. To a large extent, Netflix will not have issues with that as that money was never coming to it. 

But where things will be challenging is here: asking Netflix to pay corporate tax on businesses done in Nigeria. If you try that, it will become interesting. Yes, magically, due to IP licensing, these companies can claim they make no money in Nigeria!

Left and right, Nigeria’s best playbook is to build local capabilities because the future of commerce will be wired digitally, and no group of people in Abuja can police people in Paris, New York, and London without their governments coming to support them when things get out of hand. And deciding to suspend or ban them would become huge own-goals unless you have alternatives.

Let’s follow the Chinese model: the best defense is offense; create and support alternative companies and disintermediate the global techs (see below) in your jurisdictions so that on tax day, you will be in charge!

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3 thoughts on “Nigeria Opens A New Playbook for Global Tech

  1. In term of building alternate, do we have the competence to execute? Yes. (Excluding certain sector because we still offer poor content for video).

    However, the fear is that how do we trust them on issues of content regulation, fake news, etc.

    Notwithstanding ,there here all that we need do is apply prudently.

    Reply
    1. Further, I am just get more info that this big tech are avoiding tax which sums up to 3 bn euro owed to nation which Nigeria is included in an investigation by Action aid

      Reply
  2. We talk a lot here, but never decisive or committed, when it comes to taking action.

    We cannot emulate Chinese model because we neither have national consciousness nor the level of patriotism that allows nations to rise.

    If we launch something better than Netflix here, your people will still complain that the catalogue is not deeper and diverse as Netflix, not really the innovation or uniqueness of home movies it would air; so with that, they justify why they continue with their love for Netflix…

    The problem is never about whether we can build these things, I can guarantee that my amalgam of teams and groups can, but the citizens overwhelming support? Herein lies the demon.

    Things grow and get better because people use them, it’s not because you burn millions of dollars in marketing; if Nigerians are ready to grow Nigerian brands, then be rest assured that spellbinding innovations will be birthed here regularly.

    Those who do things know the scores, this is not the time for motivational speeches and wishful thinking.

    If you have savings for investment, how do you allocate it and what percentage goes into start-ups and purchasing of their products and services? Talk is very cheap, and that’s why we talk a lot here.

    Reply

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