By Adedapo Adesanya
Nigerians have taken to social media to express their displeasure over the planned 5 percent Value Added Tax (VAT) to be charged by government from 2020 for buying items on the internet.
This means from next year, those making online purchases in Nigeria would have to pay more.
According to the chairman of the Federal Inland Revenue Service (FIRS), Mr Babatunde Fowler, government has not made a final decision on the matter yet, but plans are ongoing to charge customers VAT on purchases made electronically using their banks on e-commerce websites.
Asides the payment on delivery option, the use of bank cards is one of the major ways people pay for purchases done online and this is set to attract charges with the proposed 5 percent inclusion on VAT from FIRS.
Many Nigerians have adapted this mode of transaction when it comes to trading, and many virtual stores have risen in the past five years as online buying and selling became mainstream.
However, with the proposed tax, many are of the opinion that the levy will dent the e-commerce sector, which is still in its developmental stage by discouraging cashless transactions.
A twitter user with the handle @i_foya, said, “I hope this news of 5% vat on online purchases is fake news sha because I don’t understand how you intend to run a cashless economy with so many charges. Na to dey carry bulk money waka around like ancient people win am.”
Some are skeptical of the move, as expressed by another Twitter user – @Ekelennaemeka, who wrote that, “5% VAT on card payments? I think it’ a welcome idea if harnessed well but this will cause issues for online buyers in Nigeria. However, this is not the right time to bring up this when we are the world headquarters of extreme poverty. What are our legislatures doing?”
Some are set to make a U-turn and revert to the traditional means of payment as opnined by @matjerriee, who stated that, “5% VAT on all online sales… who suggests this ideas for the govt? Twitter sellers, na cash payments from now o. We’re no more going cashless.”
“This will lead to a decline in use of cards online,” states Oluyomi Ojo, founder of Printivo, an online design and printing company during an interview with Quartz Africa. “Merchants will opt for bank transfers and customers will opt for other options. There’s no other way to look at the proposed policy than to see it as a card payment killer.,” he adds.
If the proposition sees the green light, it will add to a growing number of existing charges Nigerian bank card holders already face, including a card maintenance fee and it would have an effect on the country’s budding startup businesses.
Dipo Olowookere