The Federal Inland Revenue Service (FIRS) has revealed in will commence the deduction of Value Added Tax (VAT) on all online transactions with effect from January 2020.
Tunde Fowler, the Chairman of the FIRS disclosed this on Monday at the African Tax Administration Forum (ATAF) Technical Workshop on VAT.
Mr. Fowler said a lot of countries across the globe have identifies Nigeria as one of the biggest markets in Africa who are actively doing business online, therefore he disclosed it won’t be out of place for the Nigerian government to tap into the potential of such great opportunity that has presented itself to harvest more revenue for the government.
Though tentatively set January, 2020 as the commencement date. However, said may be subject to government approval.
In his statement, “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.
The Chairman argued, “VAT has remains the cash cow in most African countries, with an average VAT-to-total tax revenue rate of 31 percent. This is higher than the Organisation for Economic Cooperation and Development’s average of 20 percent.
He pointed out that this statistics is a validation of the need for the Nigerian revenue body to streamline the administration of this tax with the full knowledge of its potential contributions to national budgets.
Saying in Nigeria, VAT is critical to the development of projects at all levels of government.
Fowler explained that the sharing formula for VAT revenue is, 15 percent goes to the Federal Government, while 50 percent to state governments and 35 percent to local governments.
The Chairman explained that “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,”
