This development occurred as the Federal Government shifted its focus to various social media platforms in search of additional revenue. In a statement issued yesterday, Facebook stated that the tax will apply to those purchasing ads for either business or personal reasons.
“Due to the 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,” according to the statement.
Beginning January 1, 2022, all advertisers with a business in Nigeria will be charged an additional 7.5 percent VAT on advertising services purchased.
“Your VAT ID will appear on your ad receipts if you are registered for VAT and provide your VAT ID,” the company stated. Facebook also stated that VAT-exempt entities would be able to recover the funds if they provided their tax ID.
“If you are entitled to recover the VAT, this may assist you in recovering any VAT you paid to the Nigerian tax authorities if you are a VAT registered business in Nigeria,” the statement said.
Business and tax experts have described the move as a way for the federal government to increase government revenue and broaden the country’s tax net.
To support this new initiative, the country’s telecoms regulator, the Nigerian Communications Commission (NCC), announced plans to bring social media platforms, also known as Over The Top (OTT) services, under its jurisdiction.
The NCC stated that it was working on a framework known as Digital Services Providers (DSP) regulation, which would address several issues and complaints raised by Mobile Network Operators regarding the platforms’ activities.