Connect with us

Economy

FIRS To Generate N1.3 Trillion from VAT on Online Transactions

Published

on

FIRS
  • FIRS To Generate N1.3 Trillion from VAT on Online Transactions

The Federal Inland Revenue Services (FIRS) has said that it may generate a total of about N1.3 trillion worth of revenue in one quarter, based on an estimation of 5 percent Value Added Tax (VAT), imposed on both local and international online transactions.

Experts, however, warned that this imposition will hurt e-commerce growth in the country.

FIRS Executive Chairman, Babatunde Fowler, at the African Tax Administration Forum (ATAF) Technical Workshop on VAT held yesterday in Abuja, also said that the imposition will become operational from January 2020.

This move was made to enhance revenue regeneration considering the decrease in oil revenue in the country.

Analysis by the Nigerian Interbank Settlement System (NIBSS) revealed that within a space of three months; January to March 2019, online transactions in the country was worth N27.649 trillion; with NIBSS Settlement Series at N1.2 trillion, Point of Sales (POS) at N633.8 billion, Automated Teller Machines (ATM) at N1.5 trillion, Mobile money at N810.1 billion and Web-payment at N107.6 billion.

Hence, all things being equal, a 5 per cent imposition on transaction through these channels would bring in a total of N1.382 trillion in three months, based on these figures. The FIRS has however said that caution must be taken in projecting likely earnings as it has not concluded what percentage of VAT will be charged on online transactions.

He said: “We have thrown it out to Nigerians. Effective from January 2020, we will ask banks to charge VAT on online transactions, both domestic and international.

“VAT remains the cash cow in most African countries, with an average VAT-to-total tax revenue rate of 31 per cent. This is higher than the Organisation for Economic Cooperation and Development’s average of 20 per cent.

“This statistics, therefore, is a validation of the need for us to streamline the administration of this tax with the full knowledge of its potential contributions to national budgets.

“It is, however, also bearing in mind the rights of our taxpayers.”

The Chairman also wondered why there is a large disparity between VAT revenue generated in Senegal and that of Nigeria. He added that African countries should develop a keen interest in the taxation of digital goods and services to boost revenue generation considering the increasing preference of digital trade.

He said VAT has a high tendency of boosting revenue in Nigeria. It would be recalled that the National Bureau of Statistics (NBS), reported that the Federal Government through the Federal Inland Revenue (FIRS) generated N311.94 billion in VAT in the second quarter of the year.

The Executive Secretary of ATAF, Mr. Logan Wort, also said the ATAF VAT Technical Committee would keep an eye on developments in the construction sector and that it has already initiated the process of implementing procedures on VAT issues arising from the sector.

He adds, “While construction is that of tangibility, the rise on the intangibles is common across the globe and indeed in Africa. Beset against the fourth industrial revolution, more and more, we realise that the old way of going to a shop to buy a product may not be the most effective way when the same product is available online, and at times, cheaper”.

In other news, the Chartered Institute of Taxation of Nigeria has thrown its weight behind FIRS plans to introduce 5 per cent VAT on online transactions.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

Continue Reading
Comments

Economy

Nigeria’s Plan to Review Oil Companies’ Gas Flaring Strategies

Published

on

Oil

Nigeria is ramping up its efforts to address environmental concerns in the oil and gas sector with a comprehensive plan to review gas flaring strategies of international and indigenous oil companies.

The Minister of State for Environment, Dr. Iziaq Salako, announced this initiative during a national stakeholders engagement meeting on methane mitigation and reduction held in Abuja, Investors King reports.

Gas flaring, a common practice in the oil industry, releases methane—a potent greenhouse gas—into the atmosphere, contributing to climate change and posing health risks to communities near oil facilities.

Nigeria aims to end routine gas flaring by 2030, aligning with global climate goals and commitments.

Dr. Salako explained the importance of reducing methane emissions and highlighted the detrimental effects on public health, food security, and economic development.

He outlined practical steps being taken to tackle methane emissions, including the development of methane guidelines and the engagement of government institutions.

The ministry, through the National Oil Spill Detection and Response Agency, will conduct periodic reviews of oil companies’ plans to ensure compliance with the gas flaring deadline.

Deloitte management consultants will assist in conducting comprehensive forensic audits to scrutinize the legitimacy of forward-contracted transactions.

President Bola Tinubu’s commitment to environmental sustainability underscores the government’s dedication to addressing climate change and fulfilling its multilateral environmental agreements.

The engagement event served as a platform for stakeholders to discuss methane mitigation strategies, existing policies, and implementation challenges.

Collaboration and dialogue among diverse sectors are crucial in charting a unified course towards sustainable methane reduction in Nigeria’s oil and gas industry.

As the country navigates its environmental agenda, ensuring accountability and transparency in gas flaring practices remains paramount for achieving a greener and healthier future.

Continue Reading

Economy

Interest Rate Jumps to 24.75% as CBN Takes Aggressive Stance Against Inflation

Published

on

Dr. Olayemi Michael Cardoso

The Central Bank of Nigeria (CBN) has announced a significant increase in the monetary policy rate, known as the interest rate, to 24.75%.

This move disclosed by CBN Governor Olayemi Cardoso during the 294th Meeting of the Monetary Policy Committee press briefing in Abuja, represents a bold step by the apex bank to address the mounting inflationary pressures faced by the country.

With inflation soaring to 31.70% in February, the CBN aims to moderate this upward trend by tightening its monetary policy stance.

This decision follows the previous hike in the interest rate to 22.75% in February, showcasing the CBN’s commitment to combatting inflationary forces.

While the bank opted to maintain the Cash Reserve Ratio at 45%, the significant increase in the interest rate underscores the urgency of the situation and the need for decisive action.

Governor Cardoso emphasized that these measures are essential to stabilize the economy and safeguard the purchasing power of the Nigerian currency.

The 294th MPC marks the second meeting under Governor Cardoso’s leadership, indicating a proactive approach to addressing economic challenges.

The next MPC meeting is scheduled for May 20th and 21st, 2024, highlighting the ongoing commitment of the CBN to navigate Nigeria’s economic landscape amidst inflationary pressures.

Continue Reading

Economy

Nigeria Braces for 10th Consecutive Interest Rate Hike by Central Bank

Published

on

Central Bank of Nigeria (CBN)

As Nigeria grapples with persistently high inflation, the Central Bank of Nigeria (CBN) is gearing up to implement its tenth consecutive interest rate hike in a bid to curb the soaring prices and attract investment.

Analysts surveyed by Bloomberg are anticipating a substantial 125 basis-point increase in the key rate to 24%, marking one of the most significant adjustments in the current tightening cycle.

The decision, expected to be announced by Governor Olayemi Cardoso on Tuesday at 2 p.m. in Abuja, comes on the heels of inflation accelerating to 31.7% in February, far surpassing the central bank’s target range of 9%.

This surge has been primarily attributed to the sharp depreciation of the naira, prompting authorities to devalue the currency twice since June to narrow the gap with the unofficial market rate and encourage investor confidence.

While these measures have seen the naira strengthen in recent days and bolstered investment inflows, including a fourfold increase in overseas remittances and significant foreign investor portfolio asset purchases, there remains a palpable need for more decisive action.

Giulia Pellegrini, a senior portfolio manager at Allianz Global Investors, emphasized the necessity for the CBN to intensify its tightening efforts to regain foreign investors’ confidence in the local bond market.

While acknowledging the positive strides made by the central bank, Pellegrini stressed the importance of a more assertive approach to prevent the diversion of investor attention to other frontier markets.

As the Nigerian economy navigates through these challenging times, the impending interest rate hike signals the CBN’s determination to address inflation head-on and foster a more stable economic environment.

Continue Reading
Advertisement




Advertisement
Advertisement
Advertisement

Trending