Purchasing goods online may soon attract a 5% VAT charges assuming the Nigeria government chooses to go by it words
Fair enough for the Nigeria government who seems to have finally found a way (potential) to boost its revenue, and of course, on the detriment of the citizen. There is no doubt that every decision made by a Nation’s government is supposedly meant to be for the betterment of its people, however, in a developing country like Nigeria, some of these decisions may turn out to be a nightmare for a majority of the citizen.
Now, the State on Nigeria through its tax agency is considering a 5% Value Added Tax (VAT) specifically for online purchases. While Tax has always been a thing, this will be the first time it will affect online purchases as well and not just that, it will fore barely all, if not all card transaction, except you are probably trading in cryptocurrency.
This new move, although sounds like a very intelligent one, may, however, not favor a majority of Nigerians who will now have to deal with an increased price of goods, or perhaps a deliberate VAT surcharge on every single purchase online. You can imagine buying goods worth a hundred thousand nairas or One million naira, that means you will be charged about Five thousand naira or Fifty(50) thousand naira respectively.
The good side to this is if the VAT has been added to the goods already which then means an increased price, but if it is the other way round, which is paying the VAT separately, then it may be a headache for a lot of buyers. I guess it all depends on the merchants now to be smart enough to present there costing analysis in the best way to suit it, buyers.
That been said, it may also interest you to know that the decision to extend VAT charges to online transactions is an alternative to increasing the actual charges to go beyond 5%, although while talking about the new development, Babatunde Fowler, head of Nigeria’s federal tax agency, did not state the exact percentage the VAT would have been assuming it was to be increased.
According to Fowler, the government will achieve the said proposal by making use of banks as agent (middleman) by the time it goes live. Like I informed earlier, this simply means that all payment made via card online will now attract a 5% additional charges, and at that, you will also have to pay NGN50 for bank charges as well.
Also, if the proposal should be approved, then it may just pose another threat to the recently-introduced ‘cashless Policy’ which has rather been a struggling policy, however, it may seize to even exist, if Nigerians are now forced to boycott online payment, hence, having to go back to the usual routine of paying in cash. At that, Online merchants will stand more loss if, at the end of the day, they only have a few patronizers to shop on their respective platforms.
Anyways, the decision is yet to be made, so let’s hope that it is only one of the many boastful comments from Nigeria government as it may end up not going life. Meanwhile, do you think the new proposal is a reasonable one? Please share your comment below.