Nigeria Internet Registration Association (NiRA)

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FGN PROPOSES 5% ONLINE PURCHASE TAX

As part of the plans to raise more revenue to fund a record budget, the Federal Government of Nigeria (FGN) is considering a 5% Value Added Tax (VAT) specifically for online purchases.

Mr. Babatunde Fowler, Chairman of the Federal Inland Revenue Service (FIRS) has been quoted to say that the Government may appoint banks as agents to deduct 5% VAT on all local online purchases. The deductions will cover all purchases processed with a bank card. The policy for VAT on online purchases are yet to be concluded, but Mr. Fowler disclosed that this could be in place by early 2020.

Crucially, the policy proposal also comes at a time when many online businesses have begun to scale back on cash “payment on delivery” options, nudging more customers to embrace online payments.

Already, mixed reactions have trailed the proposed plan by the Federal Government of Nigeria to implement a 5% Value Added Tax (VAT) on goods bought online as some worry that the plan could discourage the growing digital economy and hamper the Cashless Economy initiative.