Blockchain Technology
Ten banks contribute N33.7 billion to Nigeria’s tech development fund in 2023
Ten commercial banks in Nigeria contributed a total of N33.7 billion to the Nigeria Information Technology Development Fund (NITDEF) in 2023.
According to the banks’ audited financial reports, the contribution, which is part of their statutory taxes, was deducted from their pre-tax profits for the year.
While the government has been complaining over the years about companies not complying with the mandatory payment of 1% of their profit to develop the Nigerian tech ecosystem, the 10 banks’ remittance for 2023 may have come as the highest contribution to the Fund so far.
Last year, the Federal Inland Revenue Service (FIRS) which collects the tax on behalf of the National Information Technology Development Agency (NITDA), said it collected a total of N22.5 billion as NITDEF levy in 2022 and it was the highest annual collection at that time.
The cumulative NITDEF levy paid by the 10 commercial banks in 2022 stood at N12.1 billion. This made the 2023 payments a 178% increase.
For context, a look at MTN Nigeria’s 2023 audited financial results showed that the company paid N5.6 billion as Information Technology Development Levy in 2022. However, there was no record for 2023 in the report.
What each bank paid in 2023 vs 2022
Companies required to pay the NITDEF levy
According to the National Information Technology Development Agency (NITDA) ACT 2007, which established the NITDEF, companies operating in Nigeria with an annual turnover of N100 million are to pay 1% of their annual profit before tax to the fund.
Companies mandated to pay the levy as stated in the third schedule of the Act include GSM service providers and all telecommunications companies; Cyber Companies and Internet service providers.
It also includes non-IT companies such as pension managers and pension-related companies; Banks and other Financial Institutions; and Insurance Companies.
The Act also stipulates punishment in case of default stating that,
“Any company, agency or organisation that fails within two months after a demand note, to pay the levy or the import duty imposed under section 11 of this Act commits an offence and is liable on conviction to a fine of not less than N 1,000,000.00 and the Chief Executive Officer of the company, Agency or Organisation shall be liable to be prosecuted and punished for the offence in like manner as if he had himself committed the offence, unless he proves that the act or omission constituting the offence took place without his knowledge, consent or connivance”.
However, NITDA recently lamented that many companies have not complied with the law’s provision in paying the fee. To address this, NITDA organized a stakeholders’ forum in Lagos in collaboration with the FIRS to encourage more companies to contribute to the fund last year.
What the Fund is used for
According to the Director-General of NITDA, NITDEF is crucial to the Agency’s success in all areas of its mandates geared towards technology development in Nigeria.
He said the fund is pivotal in the ongoing implementation of the National Digital Skills Strategy Implementation geared towards ensuring that 95% of Nigerians become digitally literate by 2030.
NITDA boss explained that the fund is also being deployed in its key focus areas, which include the implementation of the Nigeria Startup Act, completion of the National Digital Innovation and Entrepreneurship Centre, National Data Strategy Implementation, Adoption of Blockchain Technology, implementation of the National Digital Skills Strategy, amongst others.
Also speaking, Service’s Lead for General Tax Operations at FIRS, Kabiru Abba, who revealed that FIRS collected and remitted the sum of N22.5 billion in 2022 on behalf of NITDA, said it is important for NITDA to continue to showcase its achievements so that taxpayers can easily make a connection between the taxes paid and its socio-economic impact which will also assist to improve voluntary compliance.
