Nigeria Moves To Increase Earnings By Taxing Digital Payments
Nigeria is ramping up efforts to tap into its growing digital economy by expanding Value‑Added Tax (VAT) to include digital payments, online services and Software‑as-a-Service (SaaS) payments.
Under recent tax reforms, the Federal Inland Revenue Service (FIRS) now requires e‑invoicing and real‑time VAT reporting for digital payments and online services — a move described by FIRS as a “digital fiscalisation milestone.
The rationale is simple: a significant portion of VAT revenue in Q2 2025 already came from foreign sources, including digital service providers.
By closing loopholes and requiring foreign digital firms (like streaming platforms, SaaS vendors, and other online service providers) to register and remit VAT, the government expects a meaningful boost to non‑oil revenue.
Indeed, the FIRS has reported that it has already collected over ₦600 billion in VAT from international digital service providers — a clear sign of the fiscal potential in Nigeria’s rapidly growing digital consumption.
But this tax expansion also means that digital‑native businesses — local and foreign — must adapt quickly. Platforms offering online services, marketplaces charging commissions, and digital‑payment processors will now bear VAT compliance obligations. Failure to comply could attract penalties.
As more Nigerians shift to online services and digital payments, the expanded VAT regime aims to make the digital economy contribute its fair share — strengthening the government’s non‑oil revenue base while aligning with global digital‑tax trends.
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