Are Nigerian bloggers expected to pay tax? –
Seun, a young unemployed Nigerian graduate owns a lifestyle blog in Nigeria. This Lifestyle blog generates as much as two million monthly page views and a lot of engagement. Recently Seun was approached by EtiMuMu Limited in Nigeria and TravelHub in United Kingdom over advert slots on his blog.
Due to the impressive traction on Seun’s blog, every advertiser is looking for an opportunity to obtain an advert slot on his blog. Anyways, Seun decided to avail the advertisers advert slot on his blog.
After inserting the advert banners of the advertisers on the blog, it was time to request for payment and the advertising company requested that Seun prepare his cash invoice indicating his tax identification number so that necessary tax deductions can be made.
The foreign blog also stated that Seun should make the invoice tax inclusive so that they can remit VAT on the invoice after making payments into Seun’s account.
Now Seun is confused.
He is not a full-time professional blogger, writer or media company. He is just a young school leaver who feels who could make some online cash writing on an online, free platform.
I am very sure that Seun is not the only Nigerian blogger going through this phase and having this issue with numerous native and foreign advertisers, there are other bloggers having the same tax problems.
Now this brings us to the question, are Nigerian bloggers expected to pay tax?
Blogging has come to stay in Nigeria, you would agree with me right? Whether as a source of passive income to people who love writing or as that incremental revenue for passionate Nigerian bloggers, Blogging is now seen as a medium of self-sustenance on the long term for Nigerians.
A lot of questions that should come to the mind of Nigerian bloggers are the relationship the blogs have made them create with other registered businesses in terms of expenses.
From Domain cost, to hosting payments, Digital marketing expenses to mention a few. Have you ever thought of how these companies manage their expenditures and leverage these expenses to pay taxes to various authorities?
It does not concern you, right?
A lot of bloggers may even argue based on materiality on whether their blogs can be deemed to be a business or not since e-commerce is an area of taxation where the FIRS Inland Revenue Service are still battling with and also the fact that the income made from the blog online cannot pass as being taxable.
However it is important to note that while income from Adsense or other form of online advertising can be argued on the basis of immateriality, what about direct native advertising?
Further reading: Difference between tax evasion and tax avoidance
What about your blog being seen as a media company based on the volume of traffic coming onto the blog and the various offline strategic partnership the online platform is getting into.
What about offline alliances and relationships with brands that may lead to benefits in kind, and other fringe benefits of maximizing the potentials of one’s passion. Are these not taxable?
Okay, so if we still are bent on arguing the non-tax deductibility of all these incomes generating spectrums. How about direct advertisements?
Just in case the tax inexperience of numerous bloggers have come to fore, it is important to note that for accounting and tax purposes advertisement can be seen to be advertisement cost on the part of a business and income for other business.
Infact there are media agencies like media buyers whose bottom-line are tied to advertisement income. If your blog generates tremendous income from advertisement, especially direct advertisement, then there is the potential for exposure to tax and taxation.
To take a deep peek at this, we ought to ask ourselves certain rhetorical questions. Are there people who have their sources of living off blogging? Have you set up your blog as a media company in form of business enterprise? Are you a professional blogger and content writer?
Further reading: All you need to know about VAIDS in Nigeria
Do you make blogging income from direct advertisement?
Are you selling a service from your blog? A blogger could be a content writer, copy writer, SEO strategist, web designer, and the possibility of earning income from this service is high. Does that still make you a hobby blogger that you think you are?
Let’s even assume that you work in some company and still earn certain income from various services that you render from your blog. Does this truly confirm that you can separate your employment income from the blog income?
The more we take a dig into this, the more the exposure we are learning on Nigerian taxes. The theories from the statement above will in turn lead us to the following questions:
How did Seun sort out his advert slot issue?
What mode of taxes are bloggers supposed to pay?
Who are the professional bloggers and who are the hobby bloggers?
What about other law and financial issues associated with blogging, and online business activities?
We would discuss this in our next post. Please feel free to drop feedback and comments.