Tax Education: Are you liable to pay National Information Technology Development Levy?

The National Information Technology Development Act (herein referred to as ‘the Act’) 2007 established an agency known as the National Information Technology Development Agency (NITDA). The Act commenced 24 April, 2007.

The functions of the Agency include but not limited to the following:

i. Provision of guidelines to facilitate the establishment and maintenance of appropriate infrastructure for information technology and systems application and development in Nigeria for public and private sectors.

ii. Rendition of advisory services in all information technology matters to the public and private sections

iii. Introduce appropriate regulatory policies and incentives to encourage private sector investment in the information technology industry.

The Act established a fund known as National Information Technology Development Fund. The Act provides that “a levy of one per cent of the profit before tax of companies and enterprises enumerated in the Third Schedule to this Act with an annual turnover of N100,000,000 and above and such paid by the companies shall be tax deductible”

The companies and enterprises listed in the Third Schedule include the following:

i. GSM services providers and all telecommunications companies

ii. Cyber companies and internet service providers

iii. Pension managers and pension related companies

iv. Banks and other financial institutions

v. Insurance companies

Section 16 of the Act empowers the Federal Inland Revenue Service (FIRS) to assess and collect the levy imposed under the Act. With the introduction of the Self Assessment Regulation, companies are required to assessed themselves to this levy, while doing self-assessment for either company income tax or petroleum profit tax for an accounting period.

If the levy is not paid within specified time, the Act empowers FIRS to issue a demand note for the unpaid tax plus a two (2) per cent of the levy as penalty. Any company that fails to settle the demand note within two (2) months of issue commits an offence and is liable on conviction to a fine of note less than N1,000,000.