Nigerians have condemned the Federal Government’s proposed five per cent Value Added Tax (VAT) on online purchases.
The government said the move to raise revenue to fund the 2019 N8.9 trillion budget.
The Executive Chairman of the Federal Inland Revenue Service (FIRS), Babatunde Fowler, said the government might appoint banks as agents to deduct five per cent VAT on all local online purchases with a bank card.
In an interview, Fowler said the policy could be in place by early next year.
Fowler, however said the preferred choice for the government would be expanding the country’s tax base rather than increasing existing VAT.
Nigerians have expressed displeasure at the proposed policy which they say would adversely affect tech startups and businesses which have contributed significantly to job creation.
Starnews learnt that as part of efforts to grow the tax base, the FG launched a tax amnesty program in 2017. Tax evaders and defaulters were encouraged to pay up without facing penalties.
Midway through the amnesty period, the agency claimed it collected nearly $47 million from tax evaders.
However, the online purchase tax proposal appears at odds with Nigeria’s long-held ambitions for a cashless economy. Furthermore, the proposal holds the the possible effect of disincentivizing online purchases.
If launched, it also adds to a growing number of existing charges bank cardholders already face. This includes a monthly card maintenance fee and charges on the use of ATM and POS machines.
The proposal holds another potential effect on the economy.
However. Nigerians have taken to micro-blogging site, Twitter, to express their reservations.
Below are some of the reactions:
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