In the dynamic digital landscape of Nigeria, a recent statement by Hussaini Magaji, the Registrar General of the Corporate Affairs Commission (CAC), has ignited a significant discussion about the regulatory framework governing content creators and their tax responsibilities.

The push for social media influencers, Instagram users, and TikTok users with substantial followings to register their businesses under the Company and Allied Matters Act (CAMA) 2020 reflects a growing interest from regulatory bodies in the economic activities generated through digital platforms.

However, this raises crucial questions about the CAC’s ability to enforce tax compliance, its comprehension of its role in the digital sector, and the wider implications for digital entrepreneurs in Nigeria.

Firstly, it’s crucial to clarify the legal boundaries within which the CAC operates. While CAMA 2020 mandates the registration of businesses operating within Nigeria, its jurisdiction does not extend to enforcing tax compliance or collection.

If the CAC comprehends the content creation space, it should understand it cannot compel a content creator who works on a contractual basis to register a business name or sole proprietorship – any coercive act is unconstitutional.

In fact, they do not need to register, as their income can fall under personal income, and registering as a business name does not guarantee tax payment.

Moreover, taxation, especially in the context discussed by Magaji, falls under the purview of the Federal Inland Revenue Service (FIRS) and state governments for personal income taxes.

The FIRS has stated that its mandate does not include directly taxing individual content creators, focusing on corporate entities and businesses with significant profit margins. This leaves individual creators largely under the taxation oversight of state governments.

The distinction made by the FIRS emphasizes the decentralized nature of Nigeria’s personal income tax administration, alleviating immediate concerns among content creators about potential new tax burdens and illustrating the nuanced understanding required to navigate the digital economy’s regulatory landscape.

Regarding OPay’s role in this unfolding scenario, the company’s engagement with the CAC, aiming to regularize 300,000 agents and merchants, is a significant task that highlights the fintech giant’s commitment to formalizing the informal sector.

However, the communication and government relations strategy surrounding these efforts need scrutiny.

The portrayal of Opay’s involvement in facilitating business registration and potentially expanding the tax net could inadvertently align the brand with an “anti-people” sentiment, especially if perceived as enforcing unpopular regulatory measures without adequate public sensitization or dialogue.

To mitigate such perceptions, Opay, and indeed any fintech or digital platform operating in similar capacities, must prioritize transparent, empathetic communication that highlights the mutual benefits of compliance and registration.

The rule is: “Have your GR comms materials ready for release before and after each visit, do not leave it in the hands of government and media [especially some Nigerian media outlets that tends to sensationalize headlines]. Not only does this approach foster a more cooperative relationship between digital platforms and their users, but it also positions these companies as partners in progress, working alongside government agencies to enhance economic inclusiveness and stability.

In addressing the complexities of digital economy regulation, the role of the 14-member National Council for Digital Innovation and Entrepreneurship (NCDIE) becomes paramount. Inaugurated by President Muhammadu Buhari under the Startup Act, with the Vice President serving as its head, the NCDIE is strategically positioned to influence these matters significantly.

The council consists of a diverse group of stakeholders, including representatives from federal ministries such as Finance, Digital Economy, and Education, as well as members from the private sector, academia, and the startup ecosystem.

This composition ensures a holistic approach to digital innovation and entrepreneurship, enabling the council to provide comprehensive guidance and support on regulatory issues that impact digital content creators and the broader tech community.

The NCDIE’s involvement is crucial in ensuring that regulations like those proposed by the CAC and tax considerations by the FIRS are pro-innovation and align with the overarching goals of fostering a supportive environment for digital innovation and entrepreneurship in Nigeria. The NCDIE must wake up the sleeping giant in her!”

” from Timi Olagunju; the News Source: Techeconomy”