The tax authorities in Osun and Delta states have levied hefty fines on tech giants Google Nigeria and Meta Platforms, Inc., amounting to $150 million and $200 million respectively.
The fines are for the alleged non-remittance of Withholding Tax (WHT) from content creators and entertainers in the two states from 2020 to date.
The fines were disclosed in separate letters signed by Sola Adewunmi and Solomon Ighrakpata, Executive Chairmen of the Osun and Delta States Internal Revenue Services (IRS) respectively.
These letters, also signed by Ademola Odetunde, Chief Operating Officer of LafriquePromedia Ltd., the revenue collection agent for both states, were made available to the News Agency of Nigeria (NAN) in Lagos.
LafriquePromedia, which also consults for the IRS of Plateau State facing similar challenges, issued a 14-day compliance notice starting from July 12 and July 19, respectively.
The notice warned that non-compliance would attract further consequences for the companies.
According to Odetunde, the states are demanding payment of the assessed withholding tax deducted but not remitted by the companies, at a rate of five percent.
The taxes are linked to digital services provided to content creators and practitioners in the entertainment and creative sectors within Delta and Osun states.
“We advise your companies to comply with our demands through our revenue agent within the next 14 days,” Odetunde stated, emphasizing the role of WHT as an advance payment of income tax deductible at source for specific commercial transactions.
He stressed the obligation to remit WHT to appropriate tax authorities—federal for corporate bodies or state IRS for individuals, enterprises, and partnerships—within 21 days after the month of the transaction.
As operators within the Osun and Delta digital landscapes, Google and Meta are mandated to withhold and remit taxes as per extant laws.
Odetunde, a legal practitioner, pointed out that non-resident companies providing digital services in Nigeria are required by law to withhold and remit tax on services provided to local customers.
“The concept of withholding tax was introduced to curb tax leakages and gather information on commercial activities by resident and non-resident businesses,” Odetunde noted.
He explained the procedure for implementing WHT, which includes deducting tax from payments for specified activities and remitting it to relevant authorities. Non-compliance, he warned, constitutes a criminal offense.
Over the years, the companies have allegedly failed to remit withheld taxes to local authorities in Osun and Delta states.
“When a non-resident company fails to remit WHT, a criminal offense has been committed, and the law permits prosecution and necessary steps to recover the tax,” Odetunde said.
The penalty for non-compliance includes a fine of 10 percent of the unremitted amount plus interest at the prevailing commercial rate, currently 21 percent.
Corporate officers may also face imprisonment or fines if found guilty of tax crimes.
Odetunde highlighted that LafriquePromedia has been engaging with the companies on this matter since October 2023, to no avail.
“We hope this polite demand notice for compliance will prompt your companies to act without further delay,” he concluded.
This move by Osun and Delta states underscores Nigeria’s increasing scrutiny and enforcement of tax compliance among multinational corporations operating within its borders.
The outcome of this enforcement could set a precedent for other states facing similar issues and potentially reshape the landscape of digital taxation in Nigeria.
