Nigeria nets over $120m in digital VAT as foreign tech tax reforms pay off

Nigeria’s efforts to bring global digital service providers into its tax net have begun yielding significant dividends, with the country collecting more than $120 million in value-added tax (VAT) from non-resident suppliers over the past three years. The milestone highlights the growing success of reforms aimed at taxing the digital economy, broadening the country’s revenue base and reducing its reliance on oil earnings amid mounting fiscal pressures.
The collections followed a series of tax reforms that introduced clearer rules for taxing digital services supplied by foreign companies operating in Nigeria without a physical presence.

 

According to the Nigeria Revenue Service (NRS), the measures enabled the country to generate $21 million in 2023, between $40 million and $43 million in 2024, and an estimated $56 million to $68 million in 2025 from non-resident digital service providers.

 

Speaking on Nigeria’s digital tax reforms, Mathew Osanekwu, Director of Investigations at the Nigeria Revenue Service, said the improved collections were driven by reforms that strengthened the taxation of digital services and simplified tax compliance for foreign suppliers.

 

Nigeria’s reforms drew heavily on technical support from the African Tax Administration Forum (ATAF), an organisation that develops tax policy solutions for African countries. As a founding member of ATAF, Nigeria contributed to and benefited from the organisation’s technical work, particularly its VAT Digital Services Toolkit for Africa.

 

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Using the toolkit and related VAT policy frameworks, Nigeria introduced place-of-supply rules that determine where digital services are taxed, alongside a simplified compliance regime that made it easier for foreign digital companies to register, file returns and remit VAT on services consumed in Nigeria.

 

The reforms have strengthened Nigeria’s ability to tax cross-border digital transactions, ensuring that multinational technology companies earning income from Nigerian consumers contribute to government revenue despite having no physical presence in the country.

 

Beyond taxing digital services, ATAF’s policy recommendations also informed broader VAT reforms and supported the design and implementation of Nigeria’s electronic invoicing (e-invoicing) system. The initiative is expected to improve tax transparency, strengthen compliance and reduce revenue leakages across the economy.

 

The achievement comes as the Federal Government intensifies efforts to expand non-oil revenue through tax reforms and improved administration. With oil receipts facing persistent volatility, authorities have increasingly turned to domestic revenue mobilisation to finance infrastructure, public services and economic development.

 

Analysts say Nigeria’s success in taxing the digital economy demonstrates how African-led tax solutions can help governments adapt to emerging business models, protect their tax base and generate sustainable revenue without imposing additional tax burdens on domestic businesses.

 

The country’s experience is also expected to provide a blueprint for other African economies seeking to modernise their tax systems and capture revenue from the rapidly growing digital marketplace, where cross-border transactions continue to outpace traditional tax frameworks.