What To Expect In FIRS Proposed 5% VAT On Online PurchasesKehinde LAWAL
The current plan of the Federal Inland Revenue Service (FIRS) is to start charging Value Added Tax (VAT) on all online purchases by 2020. Although this new approach would significantly increase the country’s income, the Nigerian masses consider it undesirable, because they would bare the extra cost and not bench-seating high profile politicians.
Many consider paying extra 5% on every online purchase as double taxation simply because most of their income has already been taxed with 25% income tax, which is very true.
Below are my take on this new tax approach proposed by FIRS:
- First, placing taxation on people so that a country can generate more money is not as important as being transparent and accountable for the money generated. I would rate Nigeria 10% in terms of transparency and accountability of Tax Revenue. Therefore, it’s a very bad idea to impose tax on online revenues when you’ve not even tackle fundamentals issues that mitigate successful use of the funds. A look at Blockchain Technology and using cryptocurrencies/tokens for Tax Payment may help the clueless FIRS.
- Second, taxation has always been geared by the increasing appetite of government to generate more revenue. Not bad! But this appetite will keep growing bigger and their might be little or no tangible impact with the newly collected tax funds.
- Third, this may lead to inflation in the prices of goods and services. We all know that prices are already high, and implementing VAT would only make them go higher. And the question would be who suffers or pay for it? The Nigerians masses with low dispensable income or the high income policy makers who pays no tax.
- Finally, it would slow down the growth of eCommerce platforms across Nigeria and lead to more people may evading tax.
In conclusion, I believe charging VAT on online sales would lead to increase in prices of many consumable goods and services. And as a result, many Nigerians would find ways to still transact without paying the online VAT, thus giving FIRS more burden i.e. tackling more evaders.
Thanks for reading through this article. I hope you found it insightful and have learnt something new.
Do you think Nigerian government should charge VAT on online purchase or not?
Kindly share your opinion in the comment section below.