How multinational tech companies exploit tax laws and shift profit: a focus on Ghana and Nigeria

Shell, the Anglo-Dutch oil giant, has been accused in Nigeria of large scale oil spills in Ogoniland. As a result, critics contend, families have lost their livelihoods and children as young as two have fallen ill with chemical pneumonitis or died.

In April 2019, Shell released four reports that showed the company paid over $6 billion to the Nigerian government in 2018 in taxes and royalties. Oil and gas accounts for65 percent of total revenue to the Nigerian government.

Yet, other multinational tech companies, such as Google and Facebook, operating legally across Africa, pay substantially lower taxes as a result of obsolete tax rules. A three month investigation by Ghana’s Gideon Sarpong and Nigeria’s Olivia Ndubuisi based on interviews with dozens of experts, tax officials, court records and company documents also established that Facebook had not paid any direct taxes in Ghana and Nigeria since it began operations over a decade ago despite having over 22 million active users in both countries.

Charles Edosomwan, chief Strategist at Teksightedge Ltd, a digital communications agency based in Lagos, said that Google, Facebook and other tech giants operating in Nigeria are not far behind Shell as case studies in how multinationals reap significant financial rewards from the country without appropriate taxation.

“If the country isn’t gaining much from multinational tech companies in terms of taxation, then what’s the difference between Shell and what they did in Ogoniland and Google?” Edosomwan asked himself in a recent interview.


Edosomwan explained that every single Nigerian on the Google platform is money that the company is making everywhere because it can raise over $100m from advertisers based on its users around the world. If there are 30 million Nigerians on Facebook, Instagram and WhatsApp, he said, Facebook should pay the country a 100 dollars a year per individual. That’s the tax they should pay.

What is that figure of the tax they should pay based on? I asked.

“They make that much from impressions. Why will they not give 10% of money they make from every Nigerian eyeball by way of impressions. For example, assuming that Google makes $100 billion off impressions on their platforms in Nigeria every year and pays 10% to the government as tax, that is $10 billion.” Edosomwan said that under his proposal, Google would pay enough taxes in Nigeria to solve the problem of dwindling revenue and borrowing to fund the budget.

Digital Economic Boom & Tax Challenges

In 2018, Alphabet (Google’s parent company) made over $40bn total revenue in the Africa, Europe and Middle East region (EMEA). Alphabet does not provide a country by country breakdown of revenue in these regions making full analysis difficult. In Ghana, digital advertising is “becoming very popular with a lot of internet users and businesses,” said Mr. William Ansah, CEO of Origin 8 a leading advertising company in West Africa.

Ansah currently spends close to 30 percent of his annual budget on digital advertisement, according to the figures he provided. Although Mr. Ansah spends a significant portion of his budget on Google and Facebook ads, he has never been to the Google office in Ghana. Mr. Ansah is insistent “Google should also pay their share of taxes on profits made in the region.”

Google, is one of the world’s 10 most profitable companies, as well as the  highest ranked platform in Ghana according to popular ranking website Alexa, yet Google goes to extraordinary lengths to minimize its physical presence in the country.

The company’s office at the airport residential area neighborhood of Accra, sits inside a plain, white and blue two-storey building. The paintwork is peeling on the building’s street address. Google, whose parent company made more than $160 billion in global revenue in 2019, doesn’t even own the building – it is shared with other businesses with much lower public profile.

On a recent day in February, a front desk employee defended Google’s decision not to advertise its physical presence, saying the company had the right to choose what logos — or not — it displayed outside its office.

One woman who reporters saw leaving the building said she had no idea Google was based inside and was there to visit an entirely different company.

In an ongoing court case in Ghana involving lawyer George Agyemang Sarpong, Google Ghana and Google INC, the Ghana subsidiary goes to great lengths to contend that it is not the “owner of the search engine, does not operate or control the search engine and that its business is different from Google INC,” according to court filings obtained as part of this investigation. This is significant because monies spent by the likes of Origin 8 on the Google platform are currently “served by Google Ireland Ltd” according to billing information about ads on the Google platform in Ghana.

Rowland Kissi, law lecturer at the University of Professional Studies, Accra has described Google Ghana’s defense as, “clever attempt” by the business to shirk all “future liability of the platform” should the court rule in their favor. He agreed with the court’s initial reasoning that “the distinction regarding who is responsible for material appearing on, Google’s search engine operating in Ghana, is not so clear as to absolve the first defendant (Google Ghana) from blame before trial.”

Google Ghana describes itself publicly as simply an “AI research facility.” In court documents, however, the company admitted that its business is to “provide sales and operational support for services provided by other legal entities…”

Mr. Abdallah Ali-Nakyea, a leading tax lawyer, said that the case should interest Ghana’s revenue authority. As long as the “government can establish that Google Ghana is an agent of Google INC, the state could compel it to pay all relevant taxes including income taxes and withholding taxes,” he added.

Google Ghana did not respond to a request for comment on this investigation. Sarpong declined to comment for this story citing the ongoing litigation.  

Digitization and technology are increasingly playing bigger roles in the economies of Nigeria, Ghana and other African nations. According to a 2018 PricewaterhouseCoopers (PwC) report, Nigeria witnessed an average of 30% year-on-year growth in internet advertisement in the last five years, with a projected internet advertising spending of $125m in the entertainment and media industry in 2020.

The challenge has been taxing the so-called “digital economy” and ensuring that the disruption is contributing to revenue mobilization for African countries. 

“Existing tax systems tend to determine tax consequences on the basis of where the taxpayer is physically located,” said Ghana’s Deputy Commissioner of Large Taxpayer Office, Edward A. Gyamerah.

“The advent of modern telecommunication and the spread of digitization, the ability to effectively engage in substantial business activities in a country without a fixed place of business there, or to conclude contracts remotely through technological means with no involvement of individual employees or dependent agents, raises questions about the continuing suitability of existing Permanent Establishment or nexus rules,” he added.

The current rules argue that a company is taxable on its business profits only if it has a physical footprint in a resident jurisdiction.

Facebook and Google

In 2019, Facebook made over $6 billion in revenue from what it labels “rest of the world,” which includes Africa, Latin America and the Middle East. Apart from South Africa where Facebook is expected to pay direct taxes because of its physical presence and a change of tax laws by the South African government, the remaining 53 countries on the continent will unlikely receive any direct tax payments.

The 2018 PwC report estimated that the South Africa’s 2019 change in tax laws “could raise up to R4.4 billion ($290m) a year” from companies like Google and Facebook. This figure is close to Ghana’s average yearly spending on its flagship free senior high school education. What South Africa will likely earn from new taxes on tech giants would also match the 2016/2017 financial year Internally Generated Revenue of Oyo, a state in south west Nigeria.

A Facebook company spokesperson, Kezia Anim-Addo, said in an email: “Facebook pays all taxes required by law in the countries in which we operate (where we have offices), and we will continue to comply with our obligations.” 

Facebook has no physical presence in Ghana and Nigeria and does not provide country by country report of its revenue from Africa. For residents of Ghana and Nigeria who purchase Facebook advertisements online, the revenue is also billed in Ireland, which has been described by the EU parliament as a tax haven

Investigations into the tax affairs of popular multinationals such as Facebook and Google are important to understand the cost to the public, says Alex Ezenagu, Professor of Taxation and commercial Law at Hamad Bin Khalifa University Qatar.

‘‘There is the issue of Inter taxpayer equity,” Ezenagu said. “If the businesses don’t pay tax, the burden is shifted to either small businesses or low income earners because the revenue deficit would have to be met one way or another.”

Ezenagu said that the gap in revenue in Nigeria, for example, may cause the government to increase other taxes, such as value added tax, which increased from 5 to 7.5% in January. “When multinationals don’t pay tax, you are taxed more as a person.”

This erosion of potential taxes means that developing countries are unable to receive the revenue they require to fund their development, said Suleiman Yahaya, senior tax expert at Andersen Tax.

“If you deny any country their tax revenue,” Yahaya said, “it reduces what is available to be spent on Government projects which could be on education; capital projects etc. so the impact is on critical investments.

“There is a ripple effect where revenues are low and cannot meet the government’s plans and they go into borrowing with attendant consequences” Yahaya concluded.

Slipping the tax net

Facebook’s practice of routing overseas profits to low-tax countries is common among major tech companies, which have faced criticisms around the world for not paying enough in taxes.

Several tech giants make use of the ‘Double Irish with a Dutch Sandwich’ tax avoidance scheme to route profits to low or no tax jurisdiction. The technique involves sending profits to one Irish company, then to a Dutch company and finally to a second Irish firm established in a tax haven such as Bermuda.

Google, has over the years been accused of developing a similar sophisticated approach in the use of tax havens to avoid payments of taxes and profit shifting. This is how Google has managed to slip the tax net over the years.

According to documents filed at the Dutch Chamber of Commerce in December 2018, Google moved $22.7bn through a Dutch shell company to Bermuda in 2017. The amount channeled through Google Netherlands Holdings BV was about $4bn more than in 2016, the documents showed.

The subsidiary in the Netherlands is used to shift revenue from royalties earned outside the US to Google Ireland Holdings, an affiliate based in Bermuda, where companies pay no income tax.

Executive Secretary of the African Tax Administration Forum, Logan Wort, who was interviewed at the sidelines of the Pan-African Conference on IFFs and Taxation in Nairobi, explained that the practice where digital companies “strip out their profit before they then declare their profit and then pay a vastly reduced tax” is a “huge disadvantage” to brick and mortar companies who must comply with local tax laws.

Actions by the Nigerian and Ghanaian governments:

A source at Nigeria’s Tax Authority, FIRS, who did not wish to be named, said that Nigeria’s government is “tightening” tax laws to take further action.

“Many countries did not foresee the digital economy and its ability to generate income without a physical presence which was why tax laws didn’t cover them,” the source said.

The FIRS source said that Nigeria’s Finance Act, signed into law January 2020 has expanded provisions to shift the country’s focus from physical presence to ‘significant economic presence’.

Yahaya Suleiman at Andersen Tax says this move is in alignment with global best practices.

“The Finance minister has said Nigeria has a revenue challenge,” Suleiman said. “The government sought to look at provisions that tighten the noose a bit to see where and how to increase our tax receipts.” 

In Ghana, digital taxation discussions are slowly gaining momentum among policy makers. Deputy Commissioner of Large Taxpayer Office, Edward A. Gyamerah in a June 2019 presentation insisted that current rules must be revised to cover the digital economy and deal with companies that don’t have traditional brick-and-mortar office presences in the country.

A top government official at the Ministry of Finance who was not authorized to speak publicly also stated that, “from the taxation policy point of view, the government has not paid a lot attention to digital taxation.” He blamed the “complexity of developing robust infrastructure to assess e-commerce activity in the country” as a major reason for the government inaction. He however insisted that, “digital taxation is key focus in the medium to long term tax strategy” with a broad digital tax policy expected to be announced in 2020. Until these are done, he believes that, “Google and Facebook will pay close to nothing in Ghana.”

International Effort to deal with digital tax and profit shifting

In parallel with the unilateral effort by various governments to address the tax challenges as the global economy becomes highly digitalized, the OECD is seeking to develop an international consensus on digital taxation.

In October 2019, the OECD in their 18-page framework plan titled ‘Unified Approach’ admitted that, “in a digital age, the allocation of taxing rights can no longer be exclusively circumscribed by reference to physical presence.” 

“The current rules dating back to the 1920s are no longer sufficient to ensure a fair allocation of taxing rights in an increasingly globalised world,” the statement read. 

“We can’t be an island,” the FIRS source said. “The tech giants have their countries represented there in the OECD, so Nigeria needs to be at the table too leveraging the OECD. If you aren’t on the table, then you’re on the menu.”

Tax expert and Executive Director of nonprofit advocacy group, the Global Alliance for Tax Justice Dereje Alemayehu, described the OECD as a “partisan organization” that lacks the “mandate to determine routes for international taxation.”  

“This is a process in which there is no accountability and transparency. Developing countries have no possibility of challenging positions of governments or negotiators participating in the process. It is led by a very powerful OECD secretariat which is not fulfilling the criteria of being neutral among the negotiating positions to facilitate inter-governmental negotiations,” Dr. Dereje explained.

A paper published by five leading tax experts representing various interest groups around the world in February, 2020 re-emphasized Dereje’s argument. The experts argued that ”the opaque OECD negotiations behind closed doors, served by a Secretariat accountable to only OECD members, is simply not the way forward on finding global consensus on such an important issue.” Pascal Saint-Amans, OECD’s director of the centre for tax policy and administration disagrees and says, “reaching a multilateral solution at the OECD is the best way to address the current tax challenges.”

The experts have called for the creation of an international tax commission at the United Nations to bring developing countries into the fold.

Experts said: “Losing hundreds of billions in revenue while staring at the climate emergency and implementation of SDGs is unacceptable, it is time for developing countries to prioritise the issue.

Reporting and writing by Gideon Sarpong (Ghana) and Olivia Ndubuisi (Nigeria).

This article was developed with the support of the Money Trail Project (”

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Gideon Sarpong

Gideon Sarpong is a policy analyst and media practitioner with close to a decade of experience in policy, data and investigative journalism. Gideon is a co-founder of iWatch Africa. He is an author; a fellow of the Young African Leaders Initiative (YALI), Thomson Reuters Foundation, Commonwealth Youth Program ,Free Press Unlimited and Bloomberg Data for Health Initiative. Gideon is the founder of Sustainable Ocean Alliance Ghana. He was a 2021 Policy Leader Fellow at the European University Institute, School of Trans-national Governance in Florence, Italy and 2020/21 Open Internet For Democracy Leader. Gideon was also a 2022 Visiting Scholar/Reuters Fellow at the University of Oxford, UK and was selected as a 2022 TRF/Trust Conference Changemaker. He is currently the Africa Regional Cordinator for Environmental Justice Foundation and a 2023 Pulitzer ORN Fellow. Email:

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