Online Transaction VAT Collection To Begin 2020

The Federal Inland Revenue Service (FIRS) says it will begin to impose value-added tax (VAT) on online transactions, both domestic and international, effective from January 2020.

The FIRS executive chairman, Babatunde Fowler disclosed this on Monday at the African Tax Administration Forum (ATAF) technical workshop in Abuja.

According to him, lots of online businesses have identified the country as a healthy market, so there was a need to tap into the potentials to generate more revenue.

“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,” Fowler said.

“VAT remains the cash cow in most African countries, with an average VAT-to-total tax revenue rate of 31%. This is higher than the Organisation for Economic Cooperation and Development’s average of 20%.

“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.”

Mr Fowler, who is also the chairman of ATAF, said VAT is critical to the development of projects at all, levels of the government and collection should be enforced better in the country.

Meanwhile, Fowler noted that the date of commencement of the VAT on online transactions would be subject to government’s approval.

Recall that last week, the FIRS boss was summoned by the Presidency to explain the obvious differences between the budgeted tax collections and actual collections for the period 2015 to 2018.