Osinbajo outlines how FG plans to capture multinational firms in tax net


Federal Government is set to make more revenue in 2020, especially through tax. The government through Vice President Yemi Osinbajo, disclosed that all multinational digital companies operating abroad with significant economic presence in Nigeria will now be subjected to taxation under the new Finance Act.

Osinbajo explained that only companies that have a physical presence in the country were being taxed previously, adding that the new law had changed this.

He said, “So, most digital and multinational technology companies do not have a physical presence in Nigeria, yet make significant income in Nigeria from online activities.

“They pay no tax to Nigeria because they do not have a physical presence in Nigeria, now we are no longer relying on physical presence.”

“Under the new Act, once you have a significant economic presence in Nigeria, you are liable to tax whether you are resident here or not,” he noted, adding that non-residents, who previously had no fixed address would now be taxed under the new Act.

Can this lead to a trade war against the US?

While some critics believe that Nigeria could be at risk of trade war with the United States because the government says it will impose taxes on the firms, others alleged that the plan was to get technology companies like Facebook, Google, and others in the tax net.

Meanwhile, the US has threatened tariffs on imports from countries that impose such digital taxes.


The tech companies with heavy revenue footprint in Nigeria now have their backs against the wall because President Muhammadu Buhari-led administration wants to tax them to grow Nigeria’s revenue.

The Finance Act is the solution preferred by President Buhari to the revenue problem, which the Finance Minister, Ahmad Zainab, said Nigeria has. The Nigerian government is looking to grow its revenue through taxes, and one of such is the digital tax, which Vice President, Yemi Osinbajo, said would commence despite the threat of the US which is aimed at protecting the silicon companies.

No more back door operation: Facebook, Google, Amazon, YouTube and many other digital businesses have a sizeable market in Nigeria but don’t have a physical structure for their operations. This has bled the nation’s revenue over time.

These companies are known to prefer situating their companies in tax havens where taxes are low compared to other African and European countries. Ireland and Bermuda are some of the tax havens for these multinational companies. But according to Osinbajo, the period of making gains from their operation in Nigeria without paying tax is over.

He said, “Let me also briefly mention the new provisions on Taxation of Digital Economy and Non-Resident Companies. This is a very important aspect of our taxation policy. Before the Finance Act, only companies that had a physical presence or a fixed base in Nigeria could be taxed.