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Nigerians to Pay 5% VAT on Online Purchases

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E-commerce - Investors King
  • Nigerians to Pay 5% VAT on Online Purchases

Cost of buying goods online may surge next year as the Federal Inland Revenue Service (FIRS) perfects plans to start charging 5 percent Value Added Tax (VAT) on online transactions.

Mr Tunde Fowler, the Chairman, FIRS, gave the hint during an interview in his office in Abuja last week.

The Chairman said payments for online purchases using Nigerian credit cards will attract 5 percent VAT, adding that banks would be instructed to deduct the amount during each transaction.

“We will address the issue of the digitalised economy very soon. There is no global solution to a digitalised economy.

“Different countries have taken different solutions to address the problem. Nigeria has not taken a position yet. But, we are meeting to see if we can come up with a global solution that we can all adapt to.

“With the existing laws in Nigeria, we can appoint the banks as agents. First of all, all those who make payments for purchases online using bank cards and instruct their bankers to pay, we will tell the banks that, going forward, everyone who gives instructions for service for purchase online, they should deduct five per cent VAT,” the Chairman said.

“We are thinking that maybe early next year, we will advise banks to start deducting five percent VAT for all online purchases done locally,” he added.

While this would help curb foreign purchases and ease pressure on the foreign reserves, it will also increase the cost of goods as several imported products are not being produced locally.

Also, this may force Nigerian online shoppers to dump Nigerian cards for foreign prepaid debit cards like Payoneer to avoid paying the 5 percent VAT.

Payoneer and other foreign prepaid cards charge zero fees on online transactions. This could increase their Nigerian customers’ base even more and hurt Nigerian banks’ interest and fees charged on transactions, especially profit due to foreign exchange and online transactions.

Similarly, with the Central Bank pressuring Nigerian banks to increase loans to the private sector and reduce investments in the fixed income market, this new VAT  move would erase an estimated N650 billion in banks’ transactions annually and hurt most of the Nigerian e-commerce startups like DHL Africa eshop.

It should be recalled that in 2016, Paypal reported that Nigerian online shoppers spent N128 billion in 2015 and N172 billion in 2016 on Paypal alone. Therefore, if online transactions done with Nigerian cards were to be factored in, that number would be over N650 billion annually.

With goods worth N650 billion erased from the economy, consumer prices and other import-dependent sub-sector would suffer.

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

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PayRetailers Expands Into Nigeria, Other African Countries

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PayRetailers, the leading payment processor for Latin America, has today announced further expansion into Africa.

With coverage now across 12 countries, the company offers a unified simple payment solution that will be a game changer for cross-border online merchants looking at Africa as their next move for strategic growth.

PayRetailers offer a simple, user-friendly, and scalable experience to businesses looking to grow their regional operations and give them access to major local payment methods like MPESA, Airtel, and MTN.

The further expansion includes Burkina Faso, Cameroon, Kenya, Ivory Coast, Ghana, Senegal, South Africa and Nigeria, having recently launched in Rwanda, Zambia, Uganda, and Tanzania three months ago.

This expansion effort further solidifies PayRetailers’ ability to unlock new growth opportunities for their clients, giving them easy access to additional emerging markets. For existing clients, in fact, this process requires zero integration efforts, as it is all handled via the same API.

With many populations across Africa being underbanked, PayRetailers accelerates financial inclusion across the region by supporting businesses with their growth journey. The market is increasingly mobile and connected, with global businesses seeking to tap into the strong growth opportunities across Africa.

The expansion marks a significant milestone in PayRetailers’ ambitious growth plans, with further expansion planned into more African countries as well as Europe. Leveraging its extensive experience in Latin America, the company is well equipped to address the unique needs of African consumers and businesses.

Jonathan Vintner, Global Head of Sales at PayRetailers, said: “Expanding into eight new markets marks a significant milestone for PayRetailers as we continue our mission to bring tailored payment solutions to diverse regions. Africa is a vibrant and varied continent, with payment preferences that differ from region to region.

“For example, our launch in Kenya enables merchants to access M-Pesa, the country’s leading mobile money provider, while in South Africa, we’re offering a blend of card and cash solutions to meet local demands. All of this is seamlessly integrated into our existing API, allowing merchants to access the top payment methods across Latin America and now Africa through a single connection—with more countries on the horizon”.

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Nokia and iSAT Africa to Enhance Rural Coverage in Liberia

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Nokia today announced a strategic partnership with iSAT Africa to enhance rural connectivity in Liberia, aiming to bridge the digital divide and bring reliable, affordable network access to underserved communities.

This deployment will span over three years and cover approximately 200 sites across rural areas in Liberia.

The Nokia Rural Connect solution, including Nokia’s industry-leading AirScale radio portfolio including Massive MIMO radios, remote radio heads, and base stations.

iSAT Africa will also benefit from Nokia’s MantaRay Network Management solutions which will deliver a unified, automated view of the network, enhancing both monitoring and management capabilities, addressing critical challenges such as limited coverage and the wide digital divide in rural regions.

By extending network coverage beyond major cities, this partnership aims to drive socio-economic development in Liberia’s remote areas.

The 200-site deployment will expand iSAT Africa’s network reach, offering mobile network operators a cutting-edge solution that is both cost-effective and highly efficient.

This expansion will help rural communities access critical services, thus driving social and economic progress in the region.

Osama Said, Customer Team Head, West Africa and Enterprise at Nokia: “We are proud to collaborate with iSAT Africa on this important initiative to enhance connectivity in rural Liberia. Our Rural Connect solution ensures robust coverage in remote areas, enabling voice and data services for communities that have been historically underserved. This partnership represents a significant step toward reducing the digital divide and fostering socio-economic development.”

Said Rakesh Kukreja, Founder and Managing Director at iSAT Africa: “Our partnership with Nokia underscores our commitment to reducing the digital divide and enabling greater connectivity across Liberia.

The Nokia Rural Connect solution offers lean, energy-efficient, and easy-to-deploy technologies that allow us to extend coverage into underserved areas. This deployment will strengthen our position as a leader in providing Network as a service and improve lives by enabling reliable voice and data services and connect the unconnected.

The partnership highlights the commitment of both Nokia and iSAT Africa to driving digital inclusion and bringing the benefits of connectivity to all corners of the country.

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OpenAI Unveils ‘Strawberry’ Model, o1: A New AI With Advanced Reasoning Capabilities

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OpenAI is releasing a new artificial intelligence model known internally as “Strawberry” that can perform some human-like reasoning tasks, as it looks to stay at the top of a crowded market of rivals.

The new model, called o1, is designed to spend more time computing the answer before responding to user queries, the company said in a blog post Thursday. With the model, OpenAI’s tools should be able to solve multi-step problems, including complicated math and coding questions.

“As an early model, it doesn’t yet have many of the features that make ChatGPT useful, like browsing the web for information and uploading files and images,” the company said.

“But for complex reasoning tasks this is a significant advancement and represents a new level of AI capability. Given this, we are resetting the counter back to 1 and naming this series OpenAI o1.”

A preview version of the model will be available through OpenAI’s popular chatbot, ChatGPT, to paid Plus and Team users on Thursday.

Bloomberg previously reported the company could release the new model as soon as this week.

The model’s release comes as San Francisco-based OpenAI is looking to raise billions in funding and faces heightened competition in the race to develop ever more sophisticated artificial intelligence systems.

OpenAI isn’t the only company working on such capabilities; competitors Anthropic and Google have also touted “reasoning” skills with their advanced AI models.

In its blog post, OpenAI gave examples of the AI model’s responses to questions on topics including coding, English, and math, and asked it to solve a simple crossword puzzle.

In a series of posts on X, Noam Brown, a research scientist at OpenAI, said the company is releasing the model in preview now in part to get a sense for how people use it, and where it needs to be improved.

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