Nigerian Government to start Collecting VAT on Online Transactions from January 2020

The Federal Inland Revenue Service has disclosed that it will impose Value Added Tax (VAT) on online transaction in Nigeria from January 2020.

Chairman FIRS, Babatunde Fowler, said that Nigerian banks would start charging VAT on local and foreign online transactions.

Fowler spoke at a technical workshop organised by the African Tax Administration Forum in Abuja, where it was disclosed that African countries would invest over one trillion dollars on infrastructure over the next 10 years.

The FIRS boss, however, noted that the plan to tax online transactions would require legislative backing.

“In 2020, we will be asking the banks to charge VAT on online transactions. We have started engaging stakeholders and we are addressing all concerns around it,” he said.

In the same vein, he urged African countries to consider the taxation of digital goods and services.

Fowler, who is equally the chairman of ATAF, noted that the imposition of VAT on digital goods and services presents an opportunity for African countries.

He said, “African countries need to closely look at the taxation of digital goods and services. Increasingly, consumers are looking for products, services and goods online.

“This forms part of the 4th Industrial Revolution, where our civilisation is moving towards digital platforms as a means of facilitating the day-to-day running of businesses and households.

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“It is imperative to understand how this will affect VAT as a tax and how best to mitigate any challenges.”

He further pointed out that in May 2018, the FIRS wrote to all commercial banks requesting a list of companies, partnerships and enterprises with a banking turnover of N1bn and above.

“This activity is aimed at ascertaining those companies that are compliant with the tax laws and those that are not,” he said.

He said there was a need to adapt VAT systems to technology for effective taxation on cross-border digital trade.

He admitted that online transactions posed challenges to the jurisdiction of tax income.