The Federal Internal Revenue Services, FIRS has explained the details of the proposed 5 percent to be deducted on online transactions as VAT.
The Chairman of the FIRS, Babatunde Fowler had revealed the VAT plans in a recent interview, sparking fears that the move will hurt Nigeria’s budding e-commerce industry and FinTech start-ups.
In a tweet seen by Today’s Echo on Thursday, the FIRS has explained the move in 7 steps:
- VAT is payable on all listed items/services whether the transaction is online or offline as stated in the VAT act
- Payment of 5% VAT on online transactions as exemplified in the interview by the FIRS Chairman, Tunde Fowler is not an announcement of a new tax type
- The FIRS Act empowers the FIRS to appoint banks, other financial institutions, MDAs and other taxpayers as VAT collecting agents on online transactions
- Only transactions that are VATable(liable to be charged with VAT) whether online or offline will be subjected to payment of VAT
- All companies doing business online and remitting VAT will not pay double tax. Only online businesses that do not pay VAT will henceforth, need to pay VAT on VATable items
- VAT will not be charged on non-VATable items like medical and pharmaceutical products, basic food items, books and educational materials, baby products, all exports, locally-produced agricultural products and veterinary medicine
- According to the FIRS, Fowler wants taxation to be fair to all; those not in the tax net should be brought in so that no one who should be paying VAT is not.