By Shola Abayomi.
The Federal Inland Revenue Service (FIRS) has announced that domestic and international online transactions will be subject to value-added tax (VAT) from January 2020.
According to the FIRS executive chairman, Babatunde Fowler, the agency would issue a directive to banks to charge VAT on online transactions from next year, while urging Nigerians to prepare for the new development.
Fowler, who made the disclosure today while speaking at the African Tax Administration Forum (ATAF) technical workshop in Abuja, added that the date of commencement of the VAT charges would be subject to Federal Government’s approval.
“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.
“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”, he said.