Chairman of Federal Inland Revenue Service (FIRS), Babatunde Fowler, has disclosed that Nigerian banks will start charging Value Added Tax (VAT) on local and foreign online transactions from January 2020.
He made the disclosure when he spoke at a technical workshop organised by the African Tax Administration Forum (ATAF) in Abuja, where it was also disclosed that African countries will invest over one trillion dollars in infrastructure over the next 10 years.
The FIRS boss, however, noted that the Value Added Tax on 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,”
“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.”
“It is imperative to understand how this will affect VAT as a tax and how best to mitigate any challenges.”
Reemphasizing the importance of VAT, Fowler noted that the African Tax Outlook (2017) rated VAT as the highest tax revenue earner, followed by Petroleum Income Tax and Company Income Tax.
“VAT remains the cash cow in most ATO countries with an average VAT-to-total tax revenue ratio of 31%, which is higher than the Organisation for Economic Cooperation and Development average of 20%”.