Nigerians Kick as Govt Proposes 5% VAT on Online Purchases

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SWITZERLAND, AUGUST 6 – Nigerians are currently expressing their concerns over a recent revelation by the the Federal Internal Revenue Services, FIRS, that the government may soon introduce a 5 percent Value Added Tax, VAT on all online purchases.

The Chairman of the FIRS, Babatunde Fowler, who gave the hint , also said the federal government was yet to take a decision on whether to increase VAT or not.

Today’s Echo gathers that, if this policy is implemented, Nigerians, mostly young people who carry out transactions online will be charged extra 5 percent in addition to other charges, including card maintenance and ATM services being currently charged by bank. For instance, if you are purchasing something worth N20,000, the bank will charge you N1,000 for VAT, in addition to other charges. The implication is that the cost of online transactions will shoot up and people may begin to resort back to cash.

This is also seen as a big blow to Nigeria’s growing Fintech sector and the digitisation movement in Nigeria, which the government has so far encouraged.

Although he stated Nigeria was not fully ready for the growing global digitalised economy, the FIRS Chairman said, based on existing laws, the country will adopt a solution suitable to her peculiar circumstance.

“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.

“With the existing laws in Nigeria, we can appoint the banks as agents. First of all, all those who make payments for purchases online using bank cards and instruct their bankers to pay, we will tell the banks that, going forward, everyone who gives instructions for service for purchase online, they should deduct five per cent VAT,” he said.

“We are thinking that maybe early next year, we will advise banks to start deducting five percent VAT for all online purchases done locally,” he added.

Nigerians are already talking about the move on Social media and the 5 percent VAt is currently a trending topic on Twitter. See some of the comments below:

Also, the FIRS Chairman spoke on the lingering debate on an increase in the VAT rate from the current five per cent to either 7.5 per cent or 10 per cent.

According to Mr Fowler, given a choice between increasing VAT rate and expanding the tax base, he will prefer the latter.

“Of course, the first one will be the expansion of the tax base. The tax has to be fair. That’s where we started off. That’s why we have said we have redesigned and issued new tax certificates for VAT.

“We have given to all registered taxpayers. We believe we should have effectively at least 1.5 million corporate taxpayers,” he said.

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