17% of Nigeria’s Revenue Comes from VAT—FIRS
By Adedapo Adesanya
In order to raise the amount generated as revenue from value added tax (VAT), from January 2020, Nigerians will start to pay a levy on online transactions, regardless of whether such transaction are domestic or foreign, the Federal Inland Revenue Service (FIRS) has declared.
Executive Chairman of FIRS, Mr Babatunde Fowler, made this known yesterday at the African Tax Administration Forum (ATAF) technical workshop at the nation’s capital, Abuja.
The FIRS chief acknowledged that many countries regard Nigeria as a good market and is a destination for online business services saying there is need to key into the potentials to generate more revenue for the country.
Mr Fowler, however, explained that the date of commencement of the VAT on online transactions would only be effective if the federal government approves it.
“We have thrown it out to Nigerians. Effective from January 2020, we will ask banks to charge the VAT on online transactions, both domestic and international”, Mr Fowler said.
“VAT remains the cash cow in most African countries, with an average VAT-to-total tax revenue rate of 31 percent. This is higher than the Organization for Economic Cooperation and Development’s average of 20 percent.
“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, bear in mind the rights of our taxpayers”, he explained.
Making a case with Nigeria’s fellow West African country, Senegal, the FIRS boss said Nigeria can make more from VAT collection as its neighbouring West African country generates 51 percent of its revenue from VAT while Nigeria generates 17 percent by comparison.
He said the tax agency had notified banks in May 2018 requesting for a list of companies with a banking turnover of N1 billion and above to know the companies complying with tax laws.