Coming on the heels of the recent announcement that Facebook is set to introduce a 7.5% Value Added Tax, VAT on its advert charges, the tech giant has again taken out the time to announce how implementation will pan out.

Before diving into the guidelines released recently, it is important to state that the VAT payable applies to advertisers whose ‘sold to’ country on their business or personal address is set to Nigeria.

As guidelines to a seamless adjustment to the new regime, advertisers are urged to Add VAT ID in the payment settings. Advertisers are required to be registered for VAT such that they can provide a VAT ID which will show up on ads receipt.

Explaining further, Facebook highlights that registering for a VAT ID will help the recovery of VAT if need be from the Nigerian tax authorities.                                                                                                     

How the new Guideline Works

Since this is the first time Facebook is introducing such a move, the following technicalities have been highlighted and captured below:

  • VAT is added whenever an advertiser is charged for ads, regardless of whether the individual involved is purchasing Facebook ads for business or personal purposes.
  • As VAT is added on top of charges, an advitiser won’t reach billing threshold faster but may be charged more than a billing threshold amount.
  • If an advertiser pays for Facebook ads with a manual payment method, VAT is accounted for and applied at the applicable local rate when such ad account is funded to determine the total balance available.
  • The manual payment as highlighted above means one doesn’t need to have a billing threshold. Instead, as ads run while Facebook deducts from the money one must have added up to once a day to pay for ads. One must add enough money so that ads don’t stop before the advertiser want them to. 
  • Facebook would not be giving tax advice. If a question about taxes arises, the tech giants suggest the need to contact your tax advisors or local tax authorities.

What you should Know

  • Recently  Facebook had announced that from January 1st, 2022, Nigerians will pay 7.5 percent Value-Added Tax (VAT) on all ad placements on its platform.
  • Also, in a similar yet more recent development, Zoom Video Communications, Inc. says it will begin to charge 7.5 percent value-added tax (VAT) on customers in Nigeria from January 1, 2022.
  • These moves are coming on the heels of the new rules relating to Value Added Tax, VAT for Non-Resident Suppliers of Electronically Supplied Services issued by the Ministry of Finance.
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