The Political Economy of Nigeria’s Digital Tax Experiment
In January 2020 when I first read Nigeria’s Finance Act 2019, one of the instinctive questions that came to me was “is Nigeria serious about taxing digital trade now”? There were a few reasons for this skepticism. First, the Act seeks to tax nonresident companies (NRCs) that have a “significant economic presence” (SEP) in Nigeria but then delegates the definition of that pivotal phrase. Second, I questioned how Nigeria can enforce/administer this unilateral tax, which is payable by companies outside its borders. Third, I imagined that Nigeria’s unilateral attempt to tax digital trade could undermine relations with a strategic economic, and political partner, the US. Nigeria has now crossed the first hurdle of defining SEP – no doubt, a meaningful step forward – yet, there remains much to process before Africa’s biggest economy can begin to milk the digital cow.