Google will Charge Nigerian’s 7.5% VAT from April 2022

Google will now charge Nigerian customers 7.5% VAT on all taxable goods and services starting April 1, next month. On Tuesday morning, the company announced this in an email sent out to its business account holders.

Due to new legislation in Nigeria, starting April 1, 2022, Google will be required to charge 7.5% VAT on all taxable goods and services. No action is required on your side with regard to your Google business account,” Google said in the email sighted by local media. The American tech behemoth said the 7.5% VAT aligns with the government’s new law.

In January 2020, the Nigerian government increased VAT to 7.5% from 5% as part of its 2020 Finance Bill. After the government said that it would review the bill in 2019 after “consultations at various levels in the country.” The Minister of Finance, Zainab Ahmed, said at the time that the legislation would be “more beneficial to state governments and Local Government Areas (LGAs) in the country, many of which are already facing difficult conditions.” This new increase will occur as the country sees a surge of Nigerian youth fleeing the country, searching for greener pastures in the West.

Just last month, the president, Mohammadu Buhari, at the 6th EU-AFRICA in Brussels, Belgium, called on western leaders to help him curb the rise of young Nigerians leaving the country to the western world. “Despite burgeoning possibility, irregular northward migration from my continent drains Africa’s talent pool, while provoking political crises in the EU,” Buhari said to world leaders at the event. This new enforcement of this tax underscores the government being out of step with its direction and its people.

The Special Adviser to the President on Media and Publicity, Femi Adesina, said the Finance Bill has five strategic objectives.

“These objectives are; Promoting fiscal equity by mitigating instances of regressive taxation; Reforming domestic tax laws to align with global best practices; Introducing tax incentives for investments in infrastructure and capital markets; Supporting Micro, Small and Medium-sized businesses in line with our Ease of Doing Business Reforms; and Raising Revenues for Government.”

According to Femi Adesina media aide to the president. Google signalled that it would not be saying anything further on the matter, advising business account holders to contact their tax advisers. “Google can’t advise you on tax matters, so please contact your tax adviser for any questions regarding this change,” it said in the mail. Zoom and Facebook parent company Meta has implemented 7.5% VAT on Nigerian customers. The bill has aided the Nigerian government to generate 661.7 billion in Naira’s first quarter of 2020.

However, this 7.5% VAT tax will see Nigerians pay for using any of the Google services to reach their market target, and this, of course, will impact the gaming and gambling industry. The industry has experienced tremendous growth in the online space, especially mobile betting, becoming a new phenomenon in the Nigerian gaming and gambling industry, the first choice for punters. Sports betting companies target their players using such platforms. As one of the tools, several online-centric sports betting companies run their marketing ads along with Facebook and Twitter.

In contrast, some global tech companies have shown their readiness by complying with this directive from the Nigerian government. Facebook is complying with this directive by charging 7.5% Vat from companies in Nigeria that want to run a marketing campaign on the platform. However, the impact of this directive is yet to be ascertained what effect it will have on sports betting firms in the country.

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