Google and Meta face a $350 million fine from two Nigerian states over tax evasion charges. Read about the details and the reactions to this news.
Google Nigeria and Meta Platforms, Inc. have been fined a combined total of $350 million by tax authorities in Osun and Delta states in Nigeria for purportedly neglecting to pay out Withholding Tax (WHT) that was subtracted from content creators’ and entertainers’ earnings.
A penalty of $150 million has been imposed on Google, whereas Meta is set to receive a fine of $200 million.
Separate letters from the Executive Chairmen of Osun and Delta States’ Internal Revenue Service (IRS), Sola Adewunmi, and Solomon Ighrakpata respectively, have outlined fines that cover the period between 2020 to present. The Chief Operating Officer of LafriquePromedia Ltd., Ademola Odetunde co-signed these letters which were disclosed in Lagos to News Agency Nigeria (NAN).
Highlighting tax compliance concerns being tackled in Plateau State, Odetunde – whose firm acts as the states’ revenue collection agents and consultants for its IRS – stated that impacted businesses have been issued a 14-day notice beginning on July 12 or July 19 to conform with taxation requirements. He warned of consequences if these demands are not met.
The assessed withholding taxes calculated at 5% on digital services provided to content creators within each state are being demanded for remittance. Odetunde stressed that WHT acts as a form of payment in advance towards income tax and should be sent to the relevant taxation authorities no later than 21 days after the end of the transaction month.
Google and Meta, who are responsible for running social media platforms in Osun and Delta States’ digital environments, have a legal obligation to retain and transfer these taxes. The withholding tax method was introduced to combat the avoidance of taxation while also gathering information on commercial activities involving non-resident companies that offer online services.
According to Odetunde, who is both a legal practitioner and an expert in this area, the process for withholding taxes involves deducting them from payments made to content creators for specific activities or services provided. The withheld amount must then be remitted by relevant parties to tax authorities accordingly. In addition, he outlined the required procedures nonresident companies need to follow which include providing detailed transaction information alongside beneficiary data when submitting WHT schedules.
This enforcement action is prompted by the alleged failure of both Google and Meta to remit withheld taxes over time. According to Nigerian law, not remitting these taxes is considered a criminal offense, which could lead to fines, interest charges, and potential prosecution for non-compliance.
Failure to comply will result in a penalty consisting of a 10% fine for the unremitted amount, accompanied by an interest rate that corresponds with the current market standard at 21%. Corporate executives employed within non-compliant firms may be subject to imprisonment or further fines if found guilty of tax-related offenses.
Odetunde stressed the importance of timely compliance with tax demands to avoid additional legal repercussions and penalties. The revenue agent has been in contact with these companies about this issue since October 2023, yet they have failed to comply.
