First, I have made it clear that I am against any defense of the nonsensical where a President evoked war against a section of a country because he has problems with those breaking the law. My position has remained: go after anyone doing something illegal, and do not lump Nigerians as a block on criminal matters. It seems the government has understood that, and has effectively changed its argument against Twitter!
This is the new point: any company that needs Nigeria and Nigerians to make money must also pay taxes to Nigeria. In other words, Twitter does not have an office in Nigeria but Nigerians ship money to Twitter for adverts and promos. That has to change. If the government had used this logic to ban Twitter, I would have supported it. I mean if they can get it done on Twitter, Netflix and other media platforms with no corporate presence in Nigeria, we should support it.
There is a reason for that: while you can watch your Netflix shows in Lagos and ship money to its American headquarters, directly or indirectly, that money is not helping your city in any way. The government thinks we can force Netflix and others to pay attention to Nigeria with some taxes.
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This new argument is certainly something that will break Twitter as other African nations can rally around it. The rumour that Twitter had reached across to Nigeria could be connected to this “case” because Twitter has all to lose now, if countries see everything from this economic angle.
Minister Lai Mohammed also spoke concerning the payment of tax by tech giants in the country.
He explained that most of the OTT and social media platforms operating in Nigeria do not have offices either do they pay taxes for the billions earned.
Henceforth, the Federal government has resolved to ensure other social media platforms like Facebook and Instagram be registered in the country and adverts have been published to this effect.
The information minister, despite criticism by Human Rights groups, insists that freedom of speech has not been stifled as a result of the ban.
He maintained that other social media platforms are still available for use.
For that, Mr. Mohammed had a great day, but he has to get his boss to correct his blown statement nevertheless!
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How many here really understand the implications of this, if we extrapolate it at scale? Do not rejoice yet, because it can also work against you.
Nigerians are building their own digital platforms, with the aim of also earning dollars across the globe, and if each government starts blocking your expansion until you register in the country, before you can run a digital platform, how many start-ups can bear that? We talk about unbounded nature of the web, we talk about its scalability potential, so with this ridiculous move, what have we done? We have bounded the web, and punctured its scalability! Some parts of the world may be cut off, just because they do not have a viable market that can tempt a tech behemoth.
And before you shout Nigerians should build their own Twitter and co, bear in mind that what makes these platforms special is the ability to connect and interact from anywhere. So, if we build Nigerian Twitter, Ghanaian Twitter, Cameroonian Twitter, what have we really achieved? Also bear in mind that the global platforms connect Africans in the diaspora, so by the time we end up balkanising the platforms, we have effectively returned to pre-internet.
Our freelancers also earn income globally, taxes from there?
Well said Francis
This is correct Francis
Francis, good points but you have not proposed a solution why nations cannot earn taxes. I do not think the current model is working. We have to seek for changes. Your playbook is this: only one country in the world has the right to earn all the taxes. After all, how many countries in this world export digital portals if you remove US? Today, Nigeria has none to export but we do buy. If the government wants to get say 0.5% from the US, that is fair game.
Prof, I think you need to read up on the taxation of the digital economy, the global efforts that have been made in that regard over the last six years by the G7 and the OECD, and the unilateral actions that Nigeria has taken via the Finance Act, 2019, the Significant Economic Presence Order issued in 2020, and the Finance Act, 2020.
With effect from 3 February 2020, digital service providers (like Twitter, Facebook, etc.) that have customers in Nigeria are liable to pay tax in Nigeria if they have Significant Economic Presence in the country. Based on the tax rules in Nigeria, many of the companies will file their first corporate income tax returns this year. Hence, the idea that the companies need to set up shop in Nigeria in order for them to pay tax, is incorrect.
You can get more information on this issue from the KPMG Social Media Tax Chat I anchored recently. Here’s the link to the video: http://www.youtube.com/watch?v=0pSZ7MNVey4&t=1981s. You can watch it from 33:10.
Well said, but where is invention and creativity?
If you have a product that all the world needs then, the whole world should pay.
America regardless of their biases, have a track record of advancing science and technology. Little wonder they remain influential.
The current model for taxation cannot work for digital products and services. It puts us in the same constraints of the brick-and-mortar. Imagine paying taxes in 100 countries.
While I support the idea of fair tax, I am disappointed in Nigerian personalities for bringing up taxation as though earning from online platforms will make us prosperous.
Having a consumption mindset is unfair to human progress.
Maybe a great model will be to divide tax.
For example, companies can pay double tax. One to their host country and the other will be divided across the countries where they are present. So, if present in 100 countries, the tax will be divided across those 100 countries.
Regulation is what is needed, the idea of increasing tax load to regulate is not a good point.
” I am disappointed in Nigerian personalities for bringing up taxation as though earning from online platforms will make us prosperous.” You should not be disappointed on taxation. If you do not know that because of Facebook, Google, etc that media and marketing companies in Nigeria do not pay much in taxes, you need to look at the numbers. The fact is this: in 20 years, most things will move online and we just relax because you are disappointed that the amount is too small now and do nothing, we have a real issue. We are not asking Twitter to do us a favour: let is pay tax to Nigeria based on its operations in Nigeria. That is fair. We need to demand that as Twitter is disintermediating local ad firms and if that continues, we have nothing to take care of schools, roads, etc.
Why is the narratives changing so soon that Nigeria will be needing foreign taxation to take care of schools, roads, etc.
What is wrong discussing it now? Just curious.