The Executive Chairman Federal Inland Revenue Service, Tunde Fowler in a recent interview with Premium Times answered a question on taxation of the digital economy where he said… “We will address the issue of the digitalized economy very soon”
Here are 7 things to know about the taxation of online transactions
2. Payment of 5% VAT on online transactions as exemplified in the interview by the Executive Chairman, FIRS, Tunde Fowler is NOT an announcement of a new tax type.
3. The FIRS Act empowers the FIRS to appoint banks, other financial institutions, MDAs and other taxpayers as VAT COLLECTING AGENTS. It is the banks’ role as collecting agents on online transactions that he referenced in the interview.
4. 1.ONLY transactions that are VATable (i.e liable to be charged with VAT) whether online or offline will be subjected to payment of VAT.
5. All companies doing business online and remitting VAT will NOT pay double tax. Only online businesses that DO NOT pay VAT will need to henceforth pay VAT on VATable items.
6. All companies doing business online and remitting VAT will NOT pay double tax. Only online businesses that DO NOT pay VAT will need to henceforth pay VAT on VATable items.
7. VAT will NOT be charged on NON-VATable goods like all medical and pharmaceutical products, basic food items, books and educational materials, baby products, all exports, locally produced agricultural and veterinary medicine.
Fowler wants taxation to be fair to all: those not in the tax net (online or offline) should be brought in so that no one who should be paying VAT is not.
FIRS has been collaborating with the FG on the MSME clinic project to enhance the growth of SMEs. FIRS DOES NOT intend by any means to stagnate the growth of SMEs or online businesses.