The Federal Government is to impose new taxes on IT, fintech, e-commerce, and several tech-driven businesses if the NITDA Bill 2022 seeking to repeal the establishing law of the National Information Technology Development Agency (NITDA) passes, Technology Times can confirm.
The draft NITDA Bill 2022 is seeking to repeal the NITDA Act Act No. 28, 2007 which will significantly expand the powers of the Federal IT agency to regulate information technology (IT) and the digital economy in Nigeria.
“This Act,” promoters of the NITDA Bill stated in the document seen by Technology Times, “Repeals the National Information Technology Development Agency Act, No 28, 2007 and enact the National Information Technology Development Agency Act to ensure the effective administration, implementation and regulation of information technology systems and practices as well as digital economy in Nigeria.”
The NITDA Bill 2022 now empowers NITDA to expand the tax net as the Bill says that the Federal IT agency may expand its scope to include “such other companies and enterprises as may be determined by regulations from time to time by the Agency.”
The NITDA Bill 2022 is expanding the industry classifications that will contribute 1% of their profit before tax from five to nine in a sweeping wave that has seen the addition of information technology companies, gaming companies, e-commerce companies, and foreign digital platforms targeting the Nigerian market.
The designated businesses with an annual turnover of N100,000,000 are to pay 1% of their profit before tax as a levy to fund the National Information Technology Development Fund (NITDEF) “which shall be used for the advancement of the digital economy and related purposes,” under the proposed law.
The 1% levy, which is tax-deductible under the current NITDA Act will no longer be so in the impending law that is expanding the powers of the Agency to generate revenue for NITDEF.
Under the current NITDA Act, the five industry classifications required to pay the NITDEF levy include GSM Service Providers and all Telecommunications companies; cyber companies and Internet Providers; Pensions Managers and pension-related companies; Banks and other Financial Institutions and Insurance companies.
Download: NITDA Bill 2022
The NITDA Bill 2022 has expanded the contributors to the NITDEF levy to include mobile and fixed telecommunications companies; Information Technology companies, gaming companies, and e-commerce companies; foreign digital platforms targeting the Nigerian market. Others include Pensions managers and pension-related companies; Banks, financial institutions, fintech companies, and Insurance companies.
The NITDA Bill 2022 now empowers NITDA to expand the tax net as the Bill says that the Federal IT agency may expand its scope to include “such other companies and enterprises as may be determined by regulations from time to time by the Agency.”
Under the proposed law, “foreign digital platform targeting the Nigerian market” include:
(i) non – Nigerian information technology company that has a contracted Agent in Nigeria for the purpose of earning and transmitting commercial profit from its operations in the country,
(ii) non- Nigeria information technology company with a local subsidiary for the purpose of compliance, marketing or any other business interest, and
(iii) information technology company classified under the Finance Act, 2020 as having ‘Significant Economic Presence’ in Nigeria;
Meanwhile, information technology is broadly regarded as including “all forms of technology used to create, store, exchange and use information in its various forms (business data, voice, conversation, still images motion pictures, multimedia presentations and other forms including those not yet conceived).”
Classifications of Businesses Paying NITDEF Tax |
|
NITDA Bill 2022 |
NITDA Act 2007 |
| (a) mobile and fixed telecommunications companies;
(b) information technology companies, gaming companies, and e-commerce companies; (c) foreign digital platforms targeting the Nigerian market; (d) pensions managers and pension-related companies; (e) banks, financial institutions, and fintech companies; (f) insurance companies; and (g) such other companies and enterprises as may be determined by regulations from time to time by the Agency. |
(i) GSM Service Providers and all Telecommunications companies;
(ii) Cyber Companies and Internet Providers; (iii) Pensions Managers and pension-related companies; (iv) Banks and other Financial Institutions; (v) Insurance Companies; |
| Source: National Information Technology Development Agency (NITDA), Technology Times Independent Research Unit (TTIRU). | |
On the other hand, “Fintech” means a company providing financial services using Information Technology tools.
“This Act,” the document states, “applies to the provision, deployment, and use of information technology system, practice, and digital service within Nigeria, or on a ship or aircraft registered in Nigeria.”
In-depth: Inside The NITDA Bill 2022: Powers of the Agency
The Agency shall have powers to –
(a) implement Government policy on information technology and digital economy;
(b) test, and approve the use of information technology infrastructure and services before adoption in Nigeria;
(c) issue regulations, standards, and guidelines with respect to the use of information technology and digital services in every sector of the economy in pursuance of the objectives and functions of the Agency;
(d) collaborate with the Standards Organization of Nigeria to develop and enforce the standards formulated by the Agency in the discharge of its duties under this Act;
(e) fix permit fees and charges, and collect fees or penalties as may be necessary for the exercise of its functions;
(f) issue notices of contravention and non-compliance with this Act, regulations, standards, and guidelines made under this Act;
(g) enter premises, inspect, seize, seal, detain, and impose administrative sanctions where there is contravention of any provision of this Act, subject to the order of a court of competent jurisdiction;
(h) demand and monitor compliance with directives, regulations, standards, and guidelines issued pursuant to the provisions of this Act;
(i) establish, subsidiary offices, and provide subventions for such offices, to implement any of its mandate which may require dedicated institutional, legal, and financing framework;
(j) enforce, in collaboration with law enforcement agencies, the provisions of this Act;
(k) issue certificates of clearance for information technology and digital projects proposed by Ministries, Departments, Agencies and other public institutions of the Government;
(l) issue and renew licences and authorisations for the provision of information technology;
(m) review administrative sanctions issued under this Act; and
(n) carry out such other activities, which in its opinion are necessary to ensure the efficient performance of the objectives and functions of the Agency under this Act.
In-depth: Inside The NITDA Bill 2022: Functions of the Agency
The Agency shall –
(a) develop a framework for regulating the use, development, standardization, research, and application of information technology, emerging technology and digital services, activities, and systems in Nigeria;
(b) promote the use of data for Government planning;
(c) regulate the acquisition and use of digital systems and services in Government and create a framework for the auditing of Government information systems and digital services platforms;
(d) develop a framework for the use of digital signatures, digital contracts and other forms of digital transactions or interactions that may require authentication;
(e) issue regulations, guidelines, frameworks, directives, and standards to facilitate the establishment and maintenance of appropriate infrastructure, and information technology system, to support the development of digital service application in Nigeria;
(f) create processes and keep appropriate data to ensure effective monitoring of information technology and digital devices to support national security objectives;
(g) create incentives to promote the use of information technology including the setting up of information technology parks, promotion of innovation, start-up initiatives, entrepreneurship, the promotion of digital commerce, digital government services, privacy, and trust;
(h) coordinate, monitor, and evaluate the use and adoption of digital services, products, and platforms to promote the digital economy;
(i) coordinate and supervise the activities of any entity incorporated, owned or partly owned by the Government to provide information technology infrastructure and digital services;
(j) create a framework for testing and certification of information technology system to promote security, innovation, and the use of emerging technology;
(k) implement and execute projects for the purpose of development of information technology and digital economy;
(l) promote universal access for information technology, digital service, and system penetration in Nigeria;
(m) promote the adoption of locally produced information technology goods and services offered by Nigerian entities to support national security, job creation, and the well-being of citizens, having regard to international treaties and agreements on trade;
(n) promote incentives to encourage investments in the digital economy; (o) promote digital skills, job creation, government digital services, cybersecurity, digital inclusion, and local content development;
(p) promote the adoption of the Nigeria Top Level Country Code internet domain (.ng), sound internet governance, and give effect to the Second Schedule to this Act;
(q) determine critical areas in information technology and digital economy requiring research and development intervention, and implement the research and development in those areas;
(r) collaborate with any local or state government, company, firm, or person in any activity to facilitate the attainment of the objectives of this Act;
(s) support the development and promotion of technical specifications and standards for the use of information technology and digital service in Nigeria including emerging technologies such as robotics, blockchain, cloud computing, and artificial intelligence;
(t) render advisory service in all information technology and digital service matters to the public and private sectors;
(u) advice Government and State Governments on ways of promoting information technology and digital service in Nigeria to enhance national security, information security, cybersecurity, privacy, and trust;
(v) protect the interest and rights of consumers against unfair practices in collaboration with the consumer protection regulator;
(w) represent Nigeria at international proceedings and meetings of international organizations relating to information technology and digital economy;
(x) regulate the activity and service of a platform service provider and social networking service provider that create, maintain, and make accessible to the public, any device, tool, and application used for sharing and distributing information accessible in Nigeria; and
(y) perform such other duties, which in the opinion of the Agency are necessary or expedient to ensure the efficient performance of the functions of the Agency under this Act.
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