Osun, Delta slam Google, Meta $350m fine for tax evasion

The tax authorities in two states in Nigeria, Osun and Delta, have levied significant fines on Google Nigeria and Meta Platforms, Inc., totaling $350 million, for allegedly failing to remit Withholding Tax (WHT) deducted from content creators and entertainers.

Google has been fined $150 million, while Meta faces a $200 million penalty.

The fines, covering the period from 2020 to the present, are outlined in separate letters from Sola Adewunmi and Solomon Ighrakpata, the Executive Chairmen of the Internal Revenue Service (IRS) for Osun and Delta States, respectively. These letters, co-signed by Ademola Odetunde, Chief Operating Officer of LafriquePromedia Ltd., were disclosed to the News Agency of Nigeria (NAN) in Lagos.

Odetunde, whose firm serves as a revenue collection agent for the states and consults for the IRS of Plateau State, highlighted that similar tax compliance issues are being addressed in Plateau State. The affected companies have been given a 14-day notice starting from July 12 and July 19 to comply with the tax demands or face further consequences.

The states are demanding the remittance of the assessed withholding taxes, which are calculated at a rate of 5% on digital services provided to content creators in the respective states. Odetunde emphasized that WHT acts as an advance income tax payment and must be remitted to the appropriate tax authorities within 21 days after the end of the month in which the transaction occurred.

As operators of social media platforms within the digital landscapes of Osun and Delta States, Google and Meta are required by law to withhold and remit these taxes. The concept of withholding tax was introduced to prevent tax evasion and gather information on commercial activities, particularly those involving non-resident businesses providing digital services.

Odetunde, also a legal practitioner, noted that withholding tax procedures include deducting taxes from payments for specified activities and services provided to content creators, with subsequent remittance to the relevant tax authorities. He detailed the necessary steps for non-resident companies, including submitting WHT schedules with transaction details and beneficiary information.

Over the years, both Google and Meta have allegedly failed to remit the withheld taxes, prompting this enforcement action. Failure to remit these taxes constitutes a criminal offense under Nigerian law, and non-compliance may result in fines, interest charges, and possible prosecution.

The penalty for non-compliance includes a fine of 10% of the amount not remitted, plus interest at the prevailing commercial rate of 21%. Corporate officers of non-compliant companies may also face imprisonment or additional fines if convicted of tax crimes.

Odetunde urged the companies to comply with the tax demands promptly to avoid further legal actions and penalties. The revenue agent has been in communication with the companies regarding this matter since October 2023, but compliance has not been achieved.