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Nigeria 6% Digital Services Tax

Delays in agreement on OECD Pillar 1 global tax reallocation rights prompts Nigeria to act unilaterally

Nigeria has become one of the few countries to comply with the OECD 137-country agreement to renegotiate global taxing rights, and has acted unilaterally at the start of 2022 by introducing a 6% Digital Services Tax. This comes as OECD Pillar 1 agreement waivers.

This is on top of VAT digital services now due to be collected by non-resident providers of digital services. Digital services include apps, high frequency trading, electronic data storage and online advertising.

Non-resident companies such as Netflix and Meta, who offer digital services are also required to remit 6% of the annual turnover of their business with Nigeria to the FIRS under the new regulation. Separately, Nigeria VAT on foreign digital services was introduced in January 2022.

Check our global Digital Services Tax tracker to follow implementations of DST’s.

Pillar 1 OECD reforms slow progress

In October 2021, 137 countries agreed on reforms on tax rights of digital services (Pillar 1) and a global minimum tax rate (Pillar 2). Pillar 1 is designed to primarily only allow countries to tax for the first time around 100 global digital companies that sell digital services in their countries without any physical presence. Currently, only the country of residency of the digital companies may do so.

However, obstruction in the US Congress to approve Pillar 1 mean the introduction date of 2023 may be missed. Most other countries had agreed to a moratorium on unilateral DST’s until the end of 2023.

Kenya and Nepal has also recently introduced DST’s. Canada’s DST will become payable from 2024 in no agreement is found.

Africa & Middle East Digital Services Taxes (DST)

Country Status Rate Annual sales threshold Scope
In-country income Global income
Israel Proposed 3%-5% Digital interface; advertising; user data
Kenya Jan 2021 1.5% n/a nil Digital interfaces services, including most non-resident e-services
Nigeria Jan 2022 6%
South Africa Proposed
Tunisia Jan 2020 3% Apps; digital services (non-resident only)
Zimbabwe Jan 2019 5% Digital and ecommerce

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