Nigerians will be charged VAT for online transaction from January

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

This was confirmed by the FIRS executive chairman, Babatunde Fowler, on Monday at the African Tax Administration Forum (ATAF) technical workshop that held in Abuja.

Fowler said a lot of countries that see Nigeria as a good market are into online businesses, adding that there was a need to tap into the potentials to generate more revenue.

However, he said the date of commencement of the VAT on online transactions would be subject to government’s approval.

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Fowler said, “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.”

Fowler said Nigeria could do better with VAT collection. Giving the example of Senegal, the FIRS boss said the West African country generates 51% of its revenue from VAT while Nigeria generates 17%.


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