- 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.
MTN Partners Fintechs as Talks With Banks Lingers
MTN has activated a number of new channel partnerships with fintech companies as the company continues meeting with the commercial banks on a new pricing structure agreement.
MTN’s initial meeting for the reduction of the charges held on Tuesday with the banks ended in a deadlock and is expected to continue until a new long-term agreement can be reached on a sustainable pricing structure going forward.
The telco said this in a statement on Thursday titled ‘Update on banking channel partners’ dispute and expansion of channel network’.
MTN customers were reconnected to banking channels after the banks blocked them on April 2.
This was agreed on the basis that MTN would revert to its previous cost of sales structures with banking partners, until a new long-term agreement could be reached on a sustainable pricing structure going forward.
The telecom company noted that it had been participating in a series of meetings with the banks since Tuesday, after the intervention of the Minister of Communications and Digital Economy, the Nigerian Communication Commission and the Central Bank of Nigeria.
According to the telco, the reduction in the banks’ commission on USSD airtime is ‘international standard and best practice as scale is built along distribution channels’.
“We will provide a further market update once these discussions have been concluded.
We are confident that partners in the banking sector will work with us to ensure this process concludes as quickly as possible to the benefit of the entire industry,” MTN said.
It said it had partnered with new fintechs to expand the range of channels available to customers, adding that the partnerships would remain in place.
“The new channel partners include Sparkle, Konga Pay, Barter By Flutter Wave, Jumia Pay, OPay, Kuda, Carbon, BillsnPay, MTN On Demand, MTN Xtratime airtime loans (*606#), myMTN Web http://mymtn.com.ng and Momo agent *223#,” the statement said.
The telco expressed optimism for a mutually acceptable solution that empowered all ecosystem participants.
Trove, Bamboo Assure Nigerian Investors Assets Are Safe Following SEC Warning
Trove and Bamboo, the two of the numerous fintech companies, facilitating investments in foreign assets for Nigerians in Nigeria have released statements to assured Nigerians that have invested through their platforms that their investments are safe.
The assurance came few hours after the Nigerian Securities and Exchange Commission (SEC) released a circular to warn the public against unregistered online investment and trading platforms facilitating access to foreign markets.
The SEC, in a circular titled, ‘Proliferation of Unregistered Online Investment and Trading Platforms Facilitating Access to Trading in Securities Listed in Foreign Markets’ stated that its attention has been “drawn to the existence of several providers of online investment and trading platforms which purportedly facilitate direct access of the investing public in the Federal Republic of Nigeria to securities of foreign Companies listed on Securities Exchanges registered in other jurisdictions. These platforms also claim to be operating in partnership with Capital Market operators (CMOs) registered with the Commission.”
“The Commission categorically states that by the provisions of Sections 67-70 of the Investments and Securities Act (ISA), 2007 and Rules 414 & 415 of the SEC Rules and Regulations, only foreign securities listed on any Exchange registered in Nigeria may be issued, sold or offered for sale or subscription to the Nigerian public. Accordingly, CMOs who work in concert with the referenced online platforms are hereby notified of the Commission’s position and advised to desist henceforth.
“The Commission enjoins the investing public to seek clarification as may be required via its established channels of communication on investment products advertised through conventional or online mediums.”
However, Trove immediately released a statement, saying “Our attention has been drawn to the SEC circular that was recently issued.
“Please be aware that we are and will remain committed to being in compliance with all local laws and regulations. We have always maintained good standing with all existing compliance requirements and regulatory frameworks.
“Be rest assured that your funds and equities are safe and secure with Trove.
“Since the memorandum, we have been liaising with the SEC to get more clarity on the circular. We are also engaging with top level executives at our local partner brokers. Additionally, we have involved legal professionals to manage the on-going mediation.
“From all indications, we anticipate everything would be resolved.
“Kindly note that your US funds and equities are held in custody by Drivewealth LLC, a regulated broker dealer in the US and protected by the SIPC, for up to $500,000.
“You can continue your trading activities as normal as we are still fully capable of carrying out our responsibilities as usual.
“Be rest assured that we are on top of all the happenings and would actively communicate with you all as things progress. Thanks for all your support and confidence”
Bamboo also responded in a similar version to calm thousands of investors on its platform.
Richmond Bassey, CEO, Bamboo, in a statement sent to all registered investors said “We are aware of the recently released SEC circular about trading in foreign markets.
“First off, we want to assure you that your assets on Bamboo remain safe and easily accessible to you.
“We are already in discussions with the SEC and our broker partner and are fully committed to working with them to ensure your interests as our users are fully protected.
“We want to reassure you that there’s nothing to be concerned about. We are still able to carry out all our operations and will continue to do so. Should the situation change, we will inform and advise you on the best course of action.
“Thank you for your continued faith and trust in us. We will continue to put in all the hard work to serve you. Thank you.”
Konga Gives Free Bluetooth Headset in a Fresh Promo
Konga, a leading e-commerce company in Nigeria, has commenced a fresh promo tagged #AO2Promo for every Samsung Galaxy AO2 ordered.
Self-acclaimed Nigeria’s largest online mall said customers that ordered Samsung Galaxy AO2 on Kong will receive a free Bluetooth headset.
“What are you waiting for? FREE BLUETOOTH HEADSET is set for you.
“Just order your Samsung Galaxy A02 today on Konga & get a free Bluetooth Headset,” the company stated in a tweet.
In March, the e-commerce company announced Battle of the Brands to treat shoppers to the biggest deals and offers from top brands dominating segments.
Speaking on Battle of the Brands, Kenny Oriola, Vice President, Konga Online, said “Battle of the Brands is a time to decide who the best brands offering the biggest deals in the market are. Our customers have long waited for this campaign and many of them have expressed huge anticipation to see what each brand has to offer. As a top brand, you certainly do not want to disappoint your loyal customers.
“This is the time to show off the biggest deals and best offers as that is what shoppers are looking forward to. As a globally-renowned brand, you deserve to be seen on Battle of the Brands. We expect to see shoppers treated to a number of exclusive offers, mouth-watering deals, huge price slashes or even new products from the brands we have lined up for this campaign. Therefore, we are putting all our assets at the disposal of these brands in order to ensure that potential shoppers are satisfied,’’ he stated.
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