The world system has become advanced as information are disseminated through the click of a finger via the internet as the world as become a global village. The world has moved from the use of manual equipment to more sophisticated and technologically advanced equipment. The use of technological advanced has made information spread faster from the shores of one country to another.

Information technology include equipment, applications and services used in the dissemination of information from one end to another.

Nigeria, prior to 1990's lag behind in the use of technological methods in sharing information. At the inception of 1990's,Information Communication Technology (ICT) took a new turn as it's awareness became a part and parcel of Nigeria Communication System. The Government of president Olusegun Obasanjo established the National Information Technology Development Agency (NITDA) through an Act of parliament (that is the NITDA ACT cap.156 2007).

Information technology tax are tax imposed on companies engaging in information communication technology. However not all companies in Nigeria are subject to information technology tax.Section 12(2) of the NITDA Act provide that certain companies are under obligation to pay information technology tax and such companies include: Telecommunications companies, finance institution, insurance companies, pension managers,internet service providers and cyber companies.

These companies are expected to pay the tax at the taxable rate of 1%of their gross profit.Unlike companies income tax Where the tax is charged based on the net income or profit(that is income after deduction of expense or exempted income or deductible income from the gross or aggregate income,Information technology tax is taxable on the gross profit of a company before any deduction is made.

Some has argued that this tax is an additional burden on companies considering the 30% of companies income tax already liable for such could lead to multiple tax from the same tax base or income.some also argued that it could lead to tax evasion and create unnecessary complexity in the administration of tax.

It is important to note that it is not all companies listed above has the liability to pay.To be liable under the Act,such companies must earn at least an annual profit of 1 million Naira. This caveat tend to protect such companies which originally would have fallen under the Act but make little profit on an annual basis.This caveat can also be used as an escape route by companies to escape tax liability by hidden some profit made by it.

The information technology tax is administered by the Federal Inland Revenue Services (FIRS).Once the tax is collected, it is put into a trust fund account called the Information technology Development Agency trust fund.This monies are exempted from income tax.

Several questions has been asked challenging the essence and validity of the tax.Some has argued that the tax is a creation of a regulatory body that us the National Information technology Development Agency and thus such tax is null and void and unenforceable.

This is because based on the principle of taxation "No representative, No tax".For a tax to be imposed on the citizenry with legal backing,it must be passed by the legislature arm of Government. Thus the information tax being a product of a regulatory body is null and void.Some has argue for the continuation of the tax on the ground that the tax may have been imposed especially on foreign companies who would have avoid taxes such as CITA or TETFUND in other ways.

In conclusion, the tax has not being so much usefulness as the money thus generated has not been put into positive use such as transforming the Nigeria system from Analogy to digital.

Source: http://asknigeria.com.ng/topic/239/information-technology-tax