The Federal Inland Revenue Service says it will commence the imposition of Value Added Tax on online transactions, both domestic and international, starting from January 2020.
The FIRS Executive Chairman, Babatunde Fowler, made this disclosure yesterday at the African Tax Administration Forum technical workshop in Abuja.
Fowler acknowledged that many countries regarded Nigeria as a good market for online businesses, saying there was a need to key into the potential to generate more revenue.
He, however, said that the date of commencement of the VAT online transactions would only be effective if the federal government approved it.
“We have thrown it out to Nigerians. Effective from January 2020, we will ask banks to charge the VAT on online transactions, both domestic and international,” Fowler said.
“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, bear in mind the rights of our taxpayers,” he explained.
Citing Senegal as an example, the FIRS boss said Nigerian could make more from VAT collection as the West African country generates 51 per cent of its revenue from VAT while Nigeria generates 17 per cent.
He said the tax agency had notified banks in May 2018 requesting for a list of companies with a banking turnover of N1bn and above to know the companies complying with tax laws.
Get real time update about this post categories directly on your device, subscribe now.