FIRS MENTIONS PLANS TO DEDUCT 5% VAT FOR ONLINE TRANSACTIONS MADE WITH BANK CARDS FROM 2020

To address the challenges with taxing the digital economy in Nigeria, the Chairman of the Federal Inland Revenue Service (FIRS), Mr. Babatunde Fowler, recently mentioned FIRS’ plans to begin the collection of 5% Value Added Tax (VAT) on online transactions from 2020. Nigerian banks whose cards are used to pay for such online transactions, are to be the VAT collecting agents.

Although it is not yet clear how FIRS intends to exclude from the VAT net, card payments for goods and services that are VAT exempt under the Value Added Tax Act, the indication given by its Chairman is useful for business planning.