Executive chairman of the Federal Inland Revenue Service (FIRS), Tunde Fowler, has revealed that the agency would start charging five per cent Value Added Tax (VAT) on domestic and international online transactions as from January 2020.
Mr Fowler made this known on Monday at the African Tax Administration Forum Technical Workshop held in Abuja.
The Federal Government had said the move is to raise revenue to fund the 2019 N8.9 trillion budget.
Fowler said that several countries had identified Nigeria as a good market and many of them were into online businesses, adding that there was the need to tap the potentials to generate more revenue for the country.
He, however, said that that the date of commencement of the VAT on online transactions would be subject to government’s approval.
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.”