February 18, 2022

Nigerian tech startups are complaining of increasingly being frustrated by global Original Equipment Manufacturers (OEMs) who connive with some overseas-based distributors to ship their products into Nigeria without paying value added tax (VAT) and allied taxes.

The implication of this is that many Nigerian tech startups are frustrated out of business because they are not able to compete with the overseas-based distributors after they have creamed off 7.5 per cent VAT on their products.

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

To make matters worse for Nigerian tech startups and the nation at large, some Nigerian banks and large corporates now patronize these distributors, because by patronizing them, the banks and large corporates don’t have to pay VAT.

“This is a huge economic drain on the country and it smacks of economic sabotage for some Nigerian banks and corporates to keep patronizing these OEMs and their distributors knowing full well that the distributors are undermining the nation’s tax policy. The relevant authorities should look into this anomaly and sanction companies promoting such tax evasion scheme,” an angry chief executive of a tech startup who preferred anonymity said.

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

OEMs like Oracle, Microsoft, Dell EMC, a subsidiary of Dell Technologies, have been accused of colluding with overseas-based distributors to bring their products through some not-so-opaque channels with intent to dodge paying taxes thus shortchanging the Nigerian government

It was learnt that some of the tech startups were 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 in order to compel them to investigate the activities of these OEMs and their collaborators. They also plan a four-day shutdown protest at the offices of the OEMS in Nigeria to send the message that Nigerians have been exploited enough.