The Federal Inland Revenue Service (FIRS) has said that it would
start charging Value Added Tax on online transactions, both
domestic and international, with effective from January 2020.
The Executive Chairman of FIRS, Mr Tunde Fowler, disclosed this
at the African Tax Administration Forum Technical Workshop on VAT
on Monday in Abuja.
Fowler said that a lot of countries in the world had identified
Nigeria as a good market and many of them were into online
businesses, adding that there was the need to tap the potentials to
generate more revenue for the country.
He, however, said that that the date of commencement of the VAT
on online transactions would be subject to government’s
approval.
“We have thrown it out to Nigerians. Effective from January
2020, we will ask banks to charge VAT on online transactions, both
domestic and international.
“VAT remains the cash cow in most African countries, with an
average VAT-to-total tax revenue rate of 31 per cent. This is
higher than the Organisation for Economic Cooperation and
Development’s average of 20 per cent.
“This statistics, therefore, is a validation of the need for us
to streamline the administration of this tax with the full
knowledge of its potential contributions to national budgets.
“It is, however, also bearing in mind the rights of our
taxpayers,” he said.
According to him, in Nigeria, for example, VAT is critical to
the development of projects at all levels of government.
“VAT revenue is shared 15 per cent to the Federal Government, 50
per cent to state governments and 35 per cent to local
governments.
“FIRS wrote to all commercial banks in May 2018, requesting for
a list of companies, partnerships and enterprises with a banking
turnover of N1 billion and above.
“This activity is aimed at ascertaining those companies that are
compliant with the tax laws and those that are not,” he said.
Fowler, who is also the chairman of ATAF, said that the African
tax outlook gave some starting points on the questions to ask
regarding some aspects of VAT.
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