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eCommerce: 5% VAT on online transactions starts early year 2020



VAT on online purchases in Nigeria
Along with hints about a lingering debate on the need for an increase in existing tax rates, the Chairman of the Federal Inland Revenue Services (FIRS), Tunde Fowler, has shared that a Value Added Tax (VAT), might be deducted from users for online transactions, starting early next year.

This information was shared with PREMIUM TIMES through an interview.

Mr Tunde acknowledged that Nigeria was not prepared for a digital economy, however, he revealed that the need for this taxing was supported by existing laws in the country.

He also said that Nigeria for a long time had the lowest VAT rates of 5% in the world until recently when the United Arab Emirates (UAE) introduced a 5% VAT rate.

Fowler also revealed plans to widen the taxpayers net to improve the tax revenue. He furthermore shared that the banks would be the avenue used to get the VAT from online buyers, asking them to deduct it as carry out the payment transactions.


The news about the impending tax demand sparked unhappy reactions from Nigerians. Like this tweeting Nigerian who thinks it would affect the e-commerce sector of Nigeria and considers it best to retreat to cash payment mode.

One Harry had this to say:

“The online purchase business must not be stiffled by the unfriendly policies of the FG. The taxes are too much and there are no evidence of its use for the good of the people.”


Also, someone called VERITAS_ the Machine says:

“The VAT is already included in online purchases except purchases are below 2000 naira. Nigerian government and their many taxes and payments. Tax, VAT, education tax, Company income tax, personal income tax, NSITF, pencom, ITF, environmental tax. We are not the lowest in tax collections. We are the highest with multiple taxations.”

Nigeria would probably experience some decline in online transactions and the cashless which the whole world is moving towards might be delayed in Nigeria, if this taxation is implemented, but the full effect would only be seen come next year, if the law is effected.

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