Not only does the Information Technology (IT) sector representan enormous tax base in the developed world but IT itself has been assuming an increasingly vital role in the prosperity, security and overall well-being of states. These are perhaps some of the reasons why the Federal government decided toimpose the National Information Technology Development Levy(NITDL) to help provide some of the funds that will be used to reposition Nigeria to better take advantage of IT and the IT sector.
THE NATIONAL INFORMATION TECHNOLOGY DEVELOPMENT LEVY (NITDL)
The NIDTL was established in 2007 under section 12, subsection 2, paragraph (a) of the National Information Technology Development Agency (NITDA) Act. It is intended to be one of the principal sources of revenue for the National Information Technology Development Fund (NITDF). The levy is a 1% charge on the pre-profit income of the following types of companies and enterprises:
However, in order for liability to pay to arise, the company must have an annual turnover of at least ₦100,000,000, and for those organizations having an obligation to pay, the levy is deductible from income tax.
The levy is administered by the FIRS which assesses and collects the levy and then remits the sum realized to the NITDF.According to the FIRS, the levy is filed at the same a taxpayer is filing its Companies Income Tax returns and is due and payableon the due date of filing tax returns for a self-assessment filer.Alternatively, the levy becomes due and payable within 60 days of the service of an assessment notice on the relevant company by the FIRS. Failure to make all necessary payments within 30 days after a demand note has been served constitutes an offence and any company in violation is liable for the unpaid levy plus a sum equal to 10% of that levy together with interest at the prevailing minimum rediscount rate of the CBN plus spread to be determined by the Minister.
The levy forms a part of the NITDF which shall be applied by the NITDA towards the discharge of its functions as laid out in Section 6 of the Act. According to the FIRS the applications of the fund will include:
The NITDL demonstrates once again the enormous potentials of tax to help generate funds for meaningful development. Applied properly, the levy can be used to patch holes, such as inadequate internet penetration, in our IT system.
ABDULKAREEM ABEEB is a scholar of law. Abeeb is currently a final student of the faculty of law, university. He enjoys contributing to knowledge and holds a peculiar interest in tax. He can be contacted as follows:
Mobile No: 09028262719