In a recent amendment to the Finance Act bill, Nigeria’s Finance Minister, Zainab Ahmed, stated that foreign companies with a significant economic presence in Nigeria are now to pay tax.
From the new order, it is now clear that a company does not have to be physically present in Nigeria to pay income tax. Presence in the digital and tech space and access to the Nigerian market now qualifies a company to pay income tax to the government.
The amendment in the Companies Income Tax (Significant Economic Presence) Order, 2020, listed out criteria other than physical presence which constitutes a significant economic presence in the country.
So what constitutes the points of consideration?
The company gets to pay an income tax, as long as:
- The company gets paid for services rendered in Nigeria and to Nigerians
- The company derives a gross turnover or income of more than 25 million Naira or its equivalent in other currencies, in any fiscal year from its services.
- The company streams or downloads services of digital content, including but not limited to movies, videos, music, applications, games and e-books to any person in Nigeria
- The company transmits data collected about Nigerian users, where such data has been generated from such users activities on the digital interface including website or mobile applications
- The company provides goods or services of any nature in Nigeria, directly or indirectly through a digital platform
- The company provides intermediation services through digital platforms, a website or any other online application that links suppliers and customers in Nigeria
- The company uses a Nigerian domain name (.ng), or registered the website address in Nigeria;
- The company has a platform targeted at Nigerians and has reflected the price of its products and services in the Nigerian currency (Naira)
- The company has provided billing and payment options in Nigerian currency
- The company received payment from a Nigerian resident during the accounting year;
- The company has a purposeful and sustained interaction with Nigerian residents and has customized its digital page or platform to target Nigerians;
- The company furnished services of a technical, professional, management and consultancy nature including advertising
- The company offers training to Nigerian residents for a fee
- The company offered its products or services through satellites.
The company’s activities for a financial year are to be aggregated to determine whether or not it reaches the threshold.
However, the document also spells out a couple of exemptions.
Companies that are covered under a multilateral agreement or consensus agreement to which Nigeria is a party, shall be treated in accordance with that arrangement.
A company that makes payment to employee(s) under an employment contract shall not be considered to have a significant economic presence.
Companies like Google, Facebook, Twitter, YouTube are now, under this amendment, compelled to pay income taxes to the Nigerian government as well since they offer streamed content and advertising services to Nigerians.
Also from the points of consideration, it is clear that companies like Alibaba, Amazon, Wish and other e-commerce service providers who make money from Nigeria by collecting, processing, and transmitting funds from their Nigerian users are now subject to taxes.
This amendment means that companies that have social media platforms operational in Nigeria, where messages and services are targeted at Nigerians, will now be expected to file annual returns generated in Nigeria to pay income tax to the Nigerian government.
This is only the most recent move to tax the digital sector though it is not yet clear how the Nigerian government intends to enforce this given the present structure. These tech companies already pay taxes in the countries where the products (digital and otherwise) are created and hosted.
Nigerian companies dealing with companies that fall into this category may now be held accountable for not withholding tax on payments made.
Elon Musk gains $19bn in 3 days, gap with Jeff Bezos shrinks to $4bn
Elon Musk’s wealth jumped from $175bn as of last week Saturday to $194bn this morning.
Elon Musk has witnessed an eventful past three days as his wealth leapt from $175 billion (as of last week Saturday) to $194 billion this morning.
The eccentric businessman has now closed the gap between himself and Jeff Bezos to just about $4bn according to Bloomberg Billionaires Index.
Nairametrics is quickly going to highlight the reasons for the recent massive surge of dollars for Elon Musk.
Tesla share price increase
According to Market Watch, Tesla stocks ended yesterday at their highest value in 8 weeks. The electric car company stock price increased by 8.6% and sold at $762.32.
According to Motley Fool, the reason for this increase is a generally upbeat mood in the market about growth stocks. It also believed the increase was driven by optimistic comments about Tesla stocks by trusted analysts.
A surge in Tesla car sales
According to Nairametrics finance department, Tesla delivery of new cars in the last 3 months of the year exceeded Wall Street expectations. Tesla delivered 184,800 new cars from January to March. This number exceeded Wall Street expectations pegged at 177,000 cars.
What you should know
- Jeff Bezos only gained $1bn in the last 3 days, the same duration of days Elon Musk gained $19bn according to the Bloomberg Billionaire’s index.
- Tesla is currently being portrayed and compared to Apple. The EV carmakers are modelling their vehicles and branding them to fit the “Apple of electric cars” persona. This was made public by Canaccord Genuity analyst Jed Dorsheimer. This also played a role in the surge of stock prices.
- Tesla is currently the most valuable car company in the world with a market capitalization of $593.8 billion according to Yahoo Finance.
Top digital banking apps in Nigeria
These digital banking apps have offered a more convenient full-banking experience to their users.
Traditional banks have been facing stiff competition from fast-rising digital banks. These digital banks emerged with higher consumer demand and have offered a more convenient full-banking experience to their users including higher interest rates on savings thereby attracting more people to adopt their services.
This has caused some traditional banks like Wema Bank and Sterling Bank to adopt this trend and also develop their own digital banking platforms.
Here is a list of the top digital banking apps in Nigeria.
VFD Microfinance Bank is a fully digital bank that offers a wide range of financial products and services to professionals and entrepreneurs across all sectors. The digital bank has over 100,000 downloads on Playstore. They offer zero charges on transactions. Free account maintenance, monthly interest on savings, swift and secure transfers, withdrawals, and bill payments.
- Instant account opening without any paperwork.
- Fingerprint authorization: Login with your fingerprint and authorize transactions using your 4-digit PIN.
- Good customer service.
- Set up and track your spend budgets.
- Order debit cards from the apps.
- USSD banking service available.
- Easy bill payments on the app.
- Target savings with 8% interest rate.
- New update causes app to crash.
- Upgrading KYC takes relatively longer.
Kuda Bank is a free, digital-only bank with a microfinance banking license from the Central Bank of Nigeria. The bank includes tools for tracking your spending habits, saving more, and making the right money moves. They don’t charge card maintenance or account maintenance fees. Kuda has 1M+ downloads on Playstore. Its customers get 25 free transfers to other banks every month.
- Free debit cards.
- Good user experience.
- Free withdrawals at over 3,000 ATMs across Nigeria.
- 15% annual interest rates on savings.
- No paperwork involved when signing up.
- Automatic budgeting tools for easier money management.
- Cards often take a long time to arrive.
- No SMS notification when you get credited.
- No USSD code option for transactions.
- Identity verification takes time.
ALAT is Nigeria’s first fully digital bank, designed to help you do more with your money. Alat is owned by Wema bank. Just like every other digital bank, there is no need to visit a bank to open an account. Alat has over 500,000 downloads on Playstore.
- Free bank card delivery anywhere in Nigeria.
- A Virtual Dollar Card for online payments.
- Bill payments option.
- Collateral-free loans are available.
- Save easily with automated goal saving.
- The virtual card does not yet work.
- Delay in physical card delivery.
Sparkle is a lifestyle and finance app. It is a digital ecosystem providing financial, lifestyle, and business support services to Nigerians around the world. Licensed by the Central Bank of Nigeria (CBN), Sparkle is all about helping people achieve what they want, whether it’s entertainment, education, saving, or investing in the future. Sparkle has over 100,000+ downloads on the play store.
- Create an account with just your Bank Verification Number (BVN), email address and phone number.
- If you ever lose or misplace your card, you can freeze and unfreeze it in the Sparkle app.
- Save using Sparkle Stash for different goals at the same time.
- Percentage savings where you determine what percentage of your account balance will be going to your savings every day, week or month!
- Get real-time instant notifications for your transactions.
- Bill payments; Pay your bills whenever you want, wherever you are.
- Split bills with friends and family on the app.
- Physical and virtual cards available.
- New update causes the app to crash.
- Reversal on failed transaction takes time.
- Cards can’t be used for international transactions.
- Poor customer service.
MyMintApp is a self-service platform developed for customers to carry out a range of digital and mobile banking transactions on their accounts. It offers customers benefits such as convenience, speed, online real-time access, the security of transactions and options to initiate basic service requests without having to physically visit the bank.
MyMintApp also offers different banking services such as SME Banking, Personal Banking, Corporate Banking, Internet Banking (Electronic Banking), Current Account Opening, Savings Account Opening, Business Services, Loans, e-Business Solutions, Personalized Money Tracking and Card Solutions, etc. Mint has over 10,000+ downloads on Playstore.
- Good customer service.
- Seamless account funding via Paystack or directly from your existing bank account.
- Different saving goals with competitive interest rates to help you save for a targeted purpose.
- Money Manager to help you tag your expenses according to the most common categories, and see real views of how and where you spend monthly.
- Zero transaction fees on bill payments.
- No bonus when you refer someone to the app.
- The selfie verification process takes time.
Onebank brings a whole new financial and non-financial experience to the digital space. This application comes with sophisticated features and an impeccable user experience. It is highly secure, convenient, and easy to use. Onebank also offers payments, lending, investment, advisory, informational, and lifestyle services which brings that intuitive banking experience on your mobile. Onebank is owned by Sterling Bank
- Create a wallet account instantly with your mobile number.
- Biometric authentication.
- Instantly create your virtual card for online shopping and decide the card’s usage and expiry.
- Investments; enjoy up to 100% returns on Naira and Dollar investments.
- Quick loans of up to N5 million in 5 minutes.
- Receive money from Onebank user via QR code scan.
- Pay for airline tickets, cable & internet subscription directly on the app.
- Cardless withdrawals are available.
- Prone to error when you try to sign in.
- Bad user experience.
- Transaction history only shows debits and not credit transaction.
- Failed transactions take time to be reversed.
- Difficulty when you try to switch devices.
Rubies is a digital bank that disrupts regular banking by providing 100% digital top-notch services and technology at its peak. With Rubies, you can decide what your account number looks like. Rubies give you the financial freedom to do more than just banking and the app has garnered over 100,000 downloads on Playstore.
- No maintenance fees.
- Free Debit Cards: Also comes with an option of free delivery.
- Independent Banker: Refer people and earn every time they transact on Rubies.
- Customizable Account: Decide what your Account Number looks like.
- Proximity Transfer: Transfer money easily to friends on Rubies around you with a single tap.
- Open Account: Get an account on the fly, from anywhere (App, Website).
- Request Money: Request funds from friends on Rubies with a single button.
- Verification process takes time.
- BVN verification unstable.
- App downtime takes more than 24 hours to resolve.
- Difficulties upgrading account.
Why this matters
With the increasing number of digital banks and fintech startups, the competition for acquiring and retaining new and old customers is getting stiffer. More traditional banks will need to adopt digital banking to stay competitive.
Nairametrics | Company Earnings
Access our Live Feed portal for the latest company earnings as they drop.
- Tantalizers Plc reports a loss after tax of N422.05 million in FY 2020.
- NASD Plc announces admission of newly demutualized NGX shares.
- Lotus Halal Fixed Income announces dividend of N20 per unit for Q1 2021.
- Friesland Campina Wamco Nigeria Plc announces AGM, proposes dividend of N6.74 per share.
- ETI appoints Akin Dada as Group Executive, Corporate & Investment banking.