By Jennifer Y Omiloli
The federal government has said it would start deducting Value Added Tax (VAT) on every single online exchange both locally and globally effective January 2020.
This was revealed on Monday by the Executive Chairman of the Federal Inland Revenue Service (FIRS), Mr Babatunde Fowler, at the African Tax Administration Forum Technical Workshop on VAT on Monday in Abuja.
He 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 per cent. This is higher than the Organisation for Economic Cooperation and Development’s average of 20 per cent.
“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.
“VAT revenue is shared 15 per cent to the Federal Government, 50 per cent to state governments and 35 per cent to local governments.
“FIRS wrote to all commercial banks in May 2018, requesting for a list of companies, partnerships and enterprises with a banking turnover of N1 billion and above.
“This activity is aimed at ascertaining those companies that are compliant with the tax laws and those that are not”.
