Tax authorities in Osun and Delta State have imposed fines of $150 million and $200 million respectively on Google Nigeria and Meta Platforms Ltd for failing to pay withholding tax.
The fines specifically relate to Withholding Tax (WHT) allegedly withheld from content creators and entertainers in the two states from 2020 to date.
This is according to a separate letter signed by Adewunmi and Solomon Ighrakpata, Osun and Delta States Internal Revenue Service (IRS) in Osun and Delta states.
The letter was also signed by Mr. Ademola Odetunde, Chief Operating Officer of the state revenue agency, LafriquePromedia Ltd., and was made available to journalists in Lagos.
Odetunde said LafriquePromedia is also advising the IRS in Plateau which is facing the same challenges and has similar demands.
He said both companies received 14-day compliance notices from the affected states, which are set to take effect on July 12 and 19 respectively. Mr. Odetunde said the companies will face consequences for non-compliance after receiving these letters. He said the states demanded payment of the 5% withholding tax that was withheld but not remitted to the states.
Mr. Odetunde said the revenue or payment was from digital services provided to content creators and practitioners in the entertainment and creative sector in Delta and Osun.
“By these demands and notices for compliance, we hereby advise your companies to comply with our demands through our revenue agent within the next 14 days.”
“We want to bring your attention to the fact that the concept of WHT is a form of advance payment of income tax, which is deductable at the source of payment made for certain commercial transactions by Nigerian customers.”
“Same must be remitted to the appropriate tax authorities – Federal, by corporate bodies, or State Internal Revenue Service, by individual, enterprises and partnership within 21 days after the end of the month the transaction was made,” he said.
According to him, as operators of social media platforms in the digital environment of Osun and Delta states, the companies are mandated to withhold tax as provided by the current law.
He said the process includes services to content creators and online providers in Osun and Delta as well as remittance of tax to the relevant tax authorities through designated agents.
Odetunde said: “We observed that over the years, your companies willfully refused, failed, and neglected to remit the withheld tax to the local tax authority for Osun and Delta states, Nigeria.”
“The law permits us to prosecute the offending non-resident companies and take necessary steps to recover the WHT.”
Odetunde reminded the companies that if they fail to comply with the regulations for companies: In the case of non-resident companies, if found guilty, a penalty of 10% of the amount not deducted or the amount deducted but not remitted will be levied.
He said, “This shall be added thereto, plus interest at the prevailing commercial rate presently at 21 percent, while the officers of a non-compliant corporate taxpayer may be imprisoned or fined or both, if found guilty of tax crime.”
Odetunde said tax officials have been writing to companies since October 13, 2023, regarding the matter, but without success.
