Ministry matters

Global OEMs and overseas-based distributors evade VAT: Nigerian tech startups seek intervention from ministry and FIRS

Nigerian tech startups are complaining of growing frustration with global original equipment manufacturers (OEMs) colluding with some overseas-based distributors to ship their products to Nigeria without paying tax on value added (VAT) and related taxes.

This implies that many Nigerian tech startups are frustrated because they are unable to compete with overseas-based distributors after removing 7.5% VAT on their products.

Some of the tech startups after a seminar recently in Abuja, said they would seek intervention from the Federal Inland Revenue Service (FIRS) and the Ministry of Communications and Digital Economy, the line ministry of the National Agency for Information Technology Development (NITDA) to investigate the matter which they called “economic sabotage”.

To make matters worse for Nigerian tech startups and the nation as a whole, some Nigerian banks and large corporations are now patronizing these ATMs because by patronizing them banks and large corporations do not have to pay VAT.

“It is a huge economic drain on the country and it smacks of economic sabotage for some Nigerian banks and companies to continue patronizing these OEMs and their distributors knowing full well that the distributors are undermining the fiscal policy of the country. The relevant authorities should investigate this anomaly and sanction companies that promote such a tax avoidance scheme,” said an angry chief executive of a tech startup who preferred anonymity.

Investigations have shown that this collusion between OEMs and these overseas-based distributors only applies in Nigeria. Attempts by OEMs and their associates to extend the tax avoidance strategy to South Africa and Egypt, two African countries that share a high GDP with Nigeria, were effectively rebuffed by the relevant authorities in the two countries.

OEMs like Oracle, Microsoft, Dell EMC, a subsidiary of Dell Technologies, have been accused of colluding with overseas-based distributors to push their products through not-so-opaque channels in a bid to dodge the payment of taxes, which skimps on the Nigerian government.

It has been learned that some of the tech startups are already mobilizing some members of the National Association of Nigerian Students (NANS) to picket the offices of FIRS and the Ministry of Communications and Digital Economy to force them to investigate the activities. of these OEMs. and their collaborators. They are also planning a four-day shutdown protest at the offices of OEMS in Nigeria to send the message that Nigerians have been exploited enough.