Small business owners yesterday kicked against the plan by the Federal Inland Revenue Service Board (FIRS) to charge 5 percent Value Added Tax on all online transactions.
FIRS said it would seek President Muhammadu Buhari’s approval, to begin 5 % VAT regime all online transactions effective from January 2020. FIRS’ Executive Chairman, Mr. Babatunde Fowler, who disclosed this yesterday in Abuja at the African Tax Administration Forum (ATAF) Council technical workshop on VAT, also advocated for Nigeria’s VAT to be increased to 7.5 % “as the current 5 % is perhaps the lowest in Africa.’’
Mr. Fowler who also doubles as the Chairman ATAF noted a lot of countries were taking advantage of the Nigerian market and were selling goods online without the government benefiting from it. “Nigeria has been identified by some Chinese companies as a very good market.
A lot of countries even in Africa have identified Nigeria as very good market. And a lot of them are involved in online transactions. You might be wondering what have we decided to do in Nigeria? We are still talking about it. Like in every country, there is politics around it so we are throwing it out there that effective 2020 January, we will charge VAT on online transactions on both domestic and international transactions,” he said. This of course he said it “is subject to approvals from higher levels” adding the engagement on it has begun.’’
“We have already started engaging tax payers in Nigeria; let them understand that we need to close the gap.” An SME Consultant and DG Global Centre for Human Development and Entrepreneurship Development (GLOCHEED) Mrs Rose D. Gyar said government should not always rush to impose tax instead it should block leakages. “MSMEs run online shops because majority of them cannot afford shops.
Having said that, the question that readily comes to mind is did the FIRS engaged with operators of such businesses in the cyber space before arriving at such decision? I don’t think the tax system should always think of impositions of programmes to increase the IGR, they should rather engage with stakeholders especially operators generating businesses for taxation to reason together on how to block the leakages for a more effective tax regime as well as blockages that hinder the utilization of public resources for effective service delivery to citizens. This will positively impact on tax collections rather than impositions that would possibly lead to closure of businesses to increase the number of unemployment.” Gyar said.
But an entrepreneur, Mr Godswill Ayemoba, said if government imposed VAT on online transactions, it would not affect business owners much. “Businesses that are thriving online will not have too much of an issue regarding the adjustment to accommodate this move from government. The adjustment to include VAT could be made online with very little effect to patronage and clientele. ‘’Knowing online spenders to be mostly impulse buyers and are very spontaneous, that makes the burden light on online business owners.
‘’But on a critical note the use of social media as a marketing tool can lead to clashes as this is where disgruntled citizens spend most of their time as well,” Ayemoba explained. Meanwhile , the Federal Government generated N31.94 billion from Value Added Tax (VAT) in the second quarter of 2019. This was disclosed in the Sectoral Distribution of VAT for the second quarter of 2019 released yesterday by the National Bureau of Statistics (NBS). The data, which NBS sourced from the Federal Inland Revenue Service (FIRS), showed that the latest VAT collection value was N22.9 billion greater than the N289.04 billion recorded in the first quarter of 2019.
Daily Trust analysis shows that this represents 7.92 per cent increase quarter-on-quarter and 16.95 per cent increase year-on-year. Breakdown of the VAT based on sectors show that other manufacturing generated the highest amount of VAT with N34.43 billion and closely followed by Professional Services, which generated N29.58 billion. Commercial and Trading generated N16.27 billion while Mining generated the least and closely followed by Pharmaceutical, Soaps & Toiletries and Textile and Garment Industry with N50.60 million, N250.09 million and N316.91 million generated respectively.
Out of the total amounted generated in during the period, N151.56 billion was generated as Non-Import VAT locally while N94.90 billion was generated as Non-Import VAT for foreign. The report also showed that the balance of N65.48 billion was generated as Nigeria Customs Service-Import VAT. African tax experts target $1trn VAT from infrastructure investment However, no fewer than 30 delegates were among African tax experts charting ways to collect Value Added Tax (VAT) of more than a trillion dollars infrastructure investment in Africa for the next 10 years.
The delegates, under the auspices of the African Tax Administration Forum (ATAF), are holding ATAF Technical Workshop on Value Added Tax (VAT), in Abuja. Nigeria has no debt problem but revenue problem – Minister The Minister of Finance, Budget and National Planning Zainab Shamshuna Ahmed has noted that Nigeria does not have a debt crisis but a revenue problem.
The minister stated this during her inaugural meeting with the directors and staff of the Ministry of Budget and National Planning yesterday in Abuja. Hajiya Zainab said the country’s revenue performance must be reviewed for the economy to fix the revenue problem. She said the revenue performance of Nigeria stood at 55 percent and must be improved to 85 percent within the next two years else the country will suffer significantly in capacity and function.
She said the TSA had served its purpose but “we need to upscale the performance of the TSA”. She said the TSA had been efficient in tracking transactions and tracing it adding that the task is to increase revenue and reduce cost. She said the ministry had its work cut out for it stressing that the monitoring and you evaluation arm of the ministry is not doing well enough.
FG frowns at arbitrary surcharges at the ports The Nigerian government has frowned at arbitrary surcharges at West and Central African ports saying all charges should be harmonised for ease of doing business. The Vice President Prof. Yemi Osinbajo stated this yesterday at a one-day Sub-Regional Summit on Unfair Shipping Surcharges and High Local Shipping charges at the Ports of West and Central Africa Sub-Region, with the theme, “Impact of Unfair Shipping Surcharges and High Local Shipping Charges on National Economies and West African States”.
Represented by the Minister of Transportation, Hon. Chibuike Amaechi, the vice president said “the unilateral and arbitrary imposition of such surcharges on West and Central African bound cargo, contradicts the norms and ethics of maritime transport” adding that a common position should be adopted. The Executive Secretary/CEO Nigerian Shippers’ Council, Barr. Hassan Bello in his welcome address called on UASC member states to collaborate to remove unfriendly policies or circumstances that provide opportunities for arbitrary increases of surcharges and local shipping charges.
