Nigeria begins to charge 6% VAT on international e-commerce

BoomRadioNG | January 6, 2022

The federal government has disclosed its decision to start charging 6% tax on turnover on e-commerce businesses provided by non-resident companies in Nigeria according to the Minister of Finance, Budget, and National Planning, Mrs. Zainab Ahmed, during the public presentation and breakdown of the 2022 budget held in Abuja on Wednesday, 5th of January, 2022.

According to her, the tax collection is in line with the provision of the 2021 Finance Act, which empowers the Federal inland revenue service to access CIT on the turnover of a foreign digital company involved in transmitting, emitting, or receiving signals, sounds, messages, images, or data of any kind including e-commerce, app stores, and online adverts.

Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed

She said “Section 30 of the Finance Act designed to amend section 10, 31 and 14 of VAT is in relations to VAT obligations for non-resident digital companies and the mechanism that will be used is to restrict VAT obligations mainly to digital non-resident companies who supply individuals in Nigeria who can’t themselves self-account for VAT. So, if you visit Amazon, we are expecting Amazon to add VAT charge to whatever transaction you are paying for. I am using Amazon as an example. We are going to be working with Amazon to be registered as a tax agent for the FIRS.”

The introduction of the 6% tax on digital services offered to Nigerians by non-resident companies, implies that Nigerians who visit e-commerce platforms not resident in Nigeria will pay VAT on items purchased online as this is expected to drive growth in Nigeria’s non-oil revenue.