FG to place 5% VAT Deduction On All Online Purchases
The Federal Government of Nigeria is planning to, from next year, deduct 5% Value Added Tax for every online transaction via bank cards carried out by Nigerians. The growing digital economy includes the tech space and e-commerce where Flutterwave, Cowrywise, Piggybank, Jumia, Konga and others are players.
Tunde Fowler, Chairman of Federal Inland Revenue Service (FIRS), confirmed this in a press interview. Fowler said the country is currently working on a solution for taxing the digital economy.
“We will address the issue of the digitalised economy very soon. There is no global solution to a digitalised economy. “Different countries have taken different solutions to address the problem. Nigeria has not taken a position yet. But, we are meeting to see if we can come up with a global solution that we can all adapt to”.
The FIRS boss said the tax agency will make use of Nigerian banks as an agent in achieving the 5% value-added tax. Nigerian government projected digital economy to generate $88 billion and create up to three million jobs in the next three years.
A former minister of Industry, Trade, and Investment, Dr. Okey Enelamah, last year, said that the Nigerian government is resolute in creating an enabling environment where digital economy opportunities are not just theoretical but become real.
Taiwo Oyedele, Head of Tax and Regulatory Services at PwC Nigeria, in a blog post, had listed digital economy among major issues that will impact the tax system in 2019.
Oyedele, however, advised Nigeria’s fiscal authority to take measures to address this.