Nigeria Plan To Charge 5% On Every Online Purchase From 2020; Nigerians React

Tunde Fowler, Chairman of Federal Inland Revenue Service (FIRS) in an exclusive interview with Premium Times Newspaper that Nigeria is planning to deduct 5% VAT for every online transaction via ATM cards starting 2020.

The Nigerian government projects to generate $88b to create three million jobs in the next three years and hopes to achieve this via VAT. The FIRS boss told premium Times that Nigerian banks will serve as agents to achieve this purpose.

Many people rely on importation for business and personal consumption. Almost everything, including technology and clothes are imported on a daily. Imagine paying an extra every time you shop! Fowler said this is way to tax the digital economy for a greater purpose.

“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.”

While financial analysts are forecasting how much the FIRS could generate if the country makes do with plan, Taiwo Oyedele, Head of Tax and Regulatory services at PwC Nigeria had outlined how the digital economy will impact the tax system in 2020. It appears that the Nigerian government is taking a cue from the tariff trade war initiated by the Trump led administration to intensify recent tax reforms.

Nevertheless, Nigerians are agitated and are kicking against the proposed 5% VAT on every online purchase. Fowler claims that Nigeria is yet to take a stand, but are meeting to finalise on decisions that everyone can adapt to.

Nigerians have expressed their displeasure on social media. They have said the system is “anti-people.” 5% VAT means that for every N5,000 purchase, the bank automatically deducts N250 for VAT.

Many argue that items purchased have already been taxed, deducting another 5% amounts to extortion. In a nutshell, Nigerians have decried that the policy be jettisoned. The government should brainstorm on innovations to foster the already rumbling economy and create an enabling environment for people in the digital space, rather than extort its people. Taxing people is not the best strategy to build an ailing economy. It’s hard enough that many retailers on e-commerce sites complain about low sales because many Nigerians do not trust the digital space. Compelling people to pay VAT will not encourage them to shop online and is simply another means to extort people.