Leading civil society organisations (CSOs) in the country have expressed divergent views on current moves by the Federal Inland Revenue Service (FIRS) to legalize collection of taxes on online businesses and social media organisations.
Already, the revenue agency is seeking the consent of the National Assembly for further amendment of the just enacted 2021 Finance Act to provide for appropriate taxes of online businesses and social media.
The FIRS chairman, Muhammad Nami, disclosed the move during engagement between the heads of federal revenue generating agencies and the Senate Joint Committees now deliberating on the Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF-FSP).
The tax administrator pointed out that in addition to the social media businesses being targeted for tax, the proposed amendments to the Finance Act would also affect the Stamp Duty Act since some of its provisions were already obsolete.
Nami expatiated: “You are aware of the issues of digital economy and the challenges of policing the digital tax payers like Twitters and Facebook.
“So, we are going to come up with the rules and provisions that the National Assembly will passionately look at and approve for us so as to bring them to the tax net. We want to see a way of taxing online activities and businesses”, the FIRS boss added.
Reacting to the proposed tax moves by the FIRS on online businesses and social media, the Executive Director, Civil Society Legislative Advocacy Centre (CISLAC) , Comrade Auwal Ibrahim Musa (Rafsanjani), cautioned the revenue agency against doing anything that would adversely impact on the businesses of young Nigerians still struggling to survive and by so doing, not worsen the unemployment situation in the country.
He said: “There are many avenues which the FIRS can explore in order to generate income. The agency should not impose additional burden on young Nigerians who are just struggling to survive and making use of the social media to transact their businesses.
“The FIRS should concentrate on taxing the companies that are making profits from adverts and not individuals that subscribe to those social media platforms. Individuals who subscribe to those platforms and showcasing their businesses there should not be taxed. The tax should be on corporate entities that are making profits”, the CISLAC boss added.
Speaking in a similar tone, the Founding Director of Women Advocates Research and Documentation Centre, Dr. Abiola Akiyode-Afolabi, described the move as another ploy to shut the social media against the people.
The civil activist said: “The government can’t make money on everything when it’s not giving people back. While taxation in theory is progressive, Nigeria should follow best practices.
“This is another attempt to shut down the space against the people. This attempt should be resisted; the government should focus on providing good governance for her people, not targeting people for more hardship and exploitation”, Akiyode-Afolabi stressed.
However, in his remarks, the Executive Director, Centre for Public Accountability, Olufemi Lawson, maintained that all Nigerians doing businesses in whatever form must pay tax.
He explained: “I think the FIRS must ensure that all persons, and businesses in Nigeria must pay this tax, as far as it is legally backed by the needed legislation.”
Nami told the senators that the Finance Act was supposed to accompany the annual budget and promised that the FIRS would review feedbacks from tax payers and its internal operations for the purposes of plugging the loopholes in the Act.
He further clarified: “The Stamp Duty Act came into being in 1962 and the figures in that Act are obsolete. For instance, some of dutiable instruments which are about 100 are in the region of 10 kobo or 15 kobo. In the real time, it cannot give us any significant revenue and we would not be able to generate additional revenue for government.
“If for instance we are spending N5 to print an adhesive stamp when the tax it would be used to administer is 15 kobo, I think there would be no need for us to collect that tax in the first place.
“These and more are some of the things that we have identified so that in line with the way business processes are changing, we have to adjust the law to make tax payment simple and enable us to block leakages and mobilise revenue for the three tiers of government.
“We are not really increasing or reducing some of the rates but to change the figures to reflect the current reality”, the FIRS boss added.
Commenting on the presentations by the FIRS boss, the Chairman of the Senate Committee on Finance, who is also coordinating the joints committee deliberating on the MTEF/FSP, Senator Solomon Adeola, said the proposed amendments in the Finance Act would assist the FIRS to meet its revenue target of N10 trillion in 2022 fiscal year.
