ABUJA, Reuters – Nigeria is going to prioritize its tax collection via digital economics in 2022. Instead of focusing on resident firms with substantial financial presence in West African countries that create turnover there, the country’s tax chief stated on Thursday.

Nigeria will tax non-resident digital companies selling products to customers in Nigeria at 6%. This is part of fiscal reforms that aim to diversify and increase revenues.

Nigeria, with a GDP of 4.5%, has the lowest rate of tax in the world. However, it has had a difficult time increasing tax collections from non-oil sources.

According to the government, it is seeking to modernize taxes to support its digital economy as well as to increase compliance.

Muhammad Nami, the executive chairman of Federal Inland Revenue Service, (FIRS), stated that they would implement the guidelines… in order to collect VAT on the digital supply services of intangibles to Nigeria.

Minister says digital services includes apps, high frequency trade, electronic data storage, online advertising and other forms of high frequency trading.

According to the World Bank, Nigeria must increase non-oil tax revenues to at least 11.75 percent of its gross domestic product in order to stimulate growth.

Nami explained that the FIRS developed a digital interface in order to make it easier for companies to implement and determine which ones generate relevant Nigerian turnover.