Nigeria's Federal Inland Revenue Service to introduce value added tax on online transactions

ONLINE purchases in Nigeria will now be subject to value added tax (Vat) after the Federal Inland Revenue Service (Firs) announced that electronic transactions will now attract charges for goods and services.

 

Firs chairman Babatunde Fowler, said that the banks would be directed to impose Vat on online transactions for purchases of goods and services. He added that the Firs generated N1.5trn  ($4.14bn) in the first quarter of this year which is about 18.7% of the agency’s total revenue target of N8trn for 2019.

 

Mr Fowler said: “Soon, we will ask banks to impose Vat on online transactions for purchases of goods and services. Not that it is something new, it actually should be in existence but we will certainly follow up to make sure that every amount of Vat that is due to be collected is collected.”

 

He explained that the move was part of measures by Firs to meet its N8trn revenue target for 2019. Mr Fowler added that the agency had started taking action against companies and businesses that refuse to embrace the federal government’s tax amnesty programme.

 

According to him, Firs hopes to generate between N750bn and N1trn from the clampdown, which includes the closure of defaulters’ bank accounts. On the N1.5trn generated in the first quarter of the year, Mr Fowler said it included revenue from non-oil taxes that were 11% higher than Firs realised from that sector in the first quarter of 2018.

 

He said the N1.5trn revenue is also N330bn or 28% higher than the N1.17trn  it made in the corresponding period of 2018. Mr Fowler said the N8trn revenue target described by economy watchers as quite ambitious, was realistic with the cooperation of tax payers, among other factors.

 

“It is quite realistic as long as we have the cooperation of tax payers in addition to deployment of technology. We have already started the enforcement of over 50,000 accounts that have banking turnover of N100bn and above that have not filed their returns.

 

“We will get more people into the tax net and deploy more technology. We have what we call Auto VAT Collect and that basically assists tax payers at the point of transaction, and the VAT portion is sent straight into the federation account," Mr Fowler added.

 

He pointed out that the N8.83trn proposed by President Muhammadu Buhari for spending by the federal government in 2019 was based on a revenue target of N6.97trn. This expected income consists of oil revenue estimated at N3.73trn and non-oil oil projected at N1.39trn.

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