Effective January 1, 2022, Nigerians will start paying value added tax (VAT) for using Facebook.
The tax is applicable to Nigerians who use the platform as a means to market or sell their products.
Already, Facebook has started informing users on the platform of the development via email.
With the development, Nigerians will now pay a VAT at the applicable rate of 7.5%.
The email to Facebook users reads: “Due to implementation of a value-added tax (VAT) in Nigeria, Facebook is required to charge VAT on the sale of ads to advertisers, regardless of whether you’re buying ads for business or personal purposes.
All advertisers with a business country of Nigeria will be charged an additional 7.5% VAT on advertising services purchased beginning 1 January 2022.
“All advertisers with a business country of Nigeria will be charged an additional 7.5% VAT on advertising services purchased beginning 1 January 2022.
“If you’re registered for VAT and provide your VAT ID, your VAT ID will show up on your ads receipts. In the event that you’re entitled to recover VAT, this may help you recover any VAT you paid to the Nigerian tax authorities if you are a VAT registered business in Nigeria.”
The new tax regime is in pursuant to the Companies Income Tax (Significant Economic Presence) Order, introduced in 2020, as an amendment of the Finance Act 2019.
The document imposes tax on any “foreign entity with respect to certain services or digital transactions tax foreign digital service providers offering services to Nigerians and earning revenue in naira.”
This new regime is also carried in the Finance Bill 2021, which scaled second reading at the Senate on Wednesday.
Other social media platforms captured in the CIT net beginning from next include Twitter, YouTube, LinkedIn, Instagram, and a host of others.
Also, all foreign digital companies involved in transmitting, emitting, or receiving signals, sounds, messages, images or data of any kind including e-commerce, app stores, and online adverts are also captured into the new tax net.
