- Nigerians will pay taxes for online shopping on companies that are not resident in Nigeria but provide digital services to Nigerians
- Shoppers on e-Commerce platforms like Amazon, Facebook and others will be required to be charged VAT
- Finance Minister, Zainab Ahmed said this while presenting the 2022 budget in Abuja on Wednesday, January 5, 2022
Beginning January 2022, Nigerians who visit Amazon, Facebook and other e-commerce platforms not resident in Nigeria will have to pay VAT on items purchased online in a new law meant to drive more revenue for the federal government of Nigeria.
Zainab Ahmed, the Minister of Finance, Budget and National Planning said this during the public presentation of the 2022 budget in Abuja on Wednesday, January 5, 2022.
The Punch reports that this is a new policy contained in the new Finance Act which requires foreign companies that provide digital services in Nigeria to collect and remit VAT to the Federal Inland Revenue Services (FIRS).
New year, new law
According to the minister, the new directive is contained in Section 30 of the Finance Act which amended the provisions of Sections 10, 31 and 14 on VAT responsibilities for companies not resident in Nigeria but provide digital services to Nigerians.
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The minister stated that Section 30 of the Finance Act is created to amend sections 10, 31, 14 of VAT is in regards to VAT obligations for non-resident digital companies and the tool that will be used is to limit VAT obligations to primarily to digital non-resident companies who supply Nigerians who cannot self-account for VAT.
Foreign companies that provide digital services like apps, high-frequency trading, electronic data storage, online advertising and others are the targets of the new law, according to the minister.
Targeted at foreign companies
Zainab Ahmed who said the Nigerian government will work with foreign companies like Amazon to see how they can remit taxes to the government, in line with Section 4 of the Finance Act, which states that companies not resident in Nigeria are now expected to pay tax at six per cent on their turnover.
In 2019, the Nigerian government mulled the idea of taxing foreign companies not resident in Nigeria but providing digital services to Nigerians in accordance with the Finance Act of 2020.
Facebook had announced in December that beginning January 2022, it will add 7.5 VAT to their charges to individuals seeking to pay for advertisement on its platform.
What experts say
Analysts are divided on the new policy. While others believe it will drive more Foreign Direct Investment (FDI) in Nigeria who might come to set up shop in order to enjoy waivers, others say it will scare some away as they might shut down most of their platforms against Nigerians.
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FG, states on VAT war
Legit.ng reports that The governor of River state, Nyesom Wike, has cleared the air concerning the Value Added Tax (VAT) collection issue between the Federal Inland Revenue Service (FIRS) and some states.
This Day reports that Wike said his state was not at war with the federal government or any of its agencies.
The governor made the clarification following insinuations in some quarters about hostility between the two tiers of government in the wake of the legal dispute over who is authorised to collect VAT in the state.