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ITMore Africa NewsNigerians slam latest e-commerce taxes

October 23, 2019by myles

Nigeria’s Federal Inland Revenue Service (FIRS) has confirmed it will impose a 5% tax on e-commerce transactions, effective in 2020.

Babatunde Fowler, FIRS chairman described the tax as “a practice that actually should be in existence” and said the organisation is working with banks to ensure that the fee is automatically deducted at the point of payment.

Nigeria’s government continues to push to tax the country’s US$12-billion ecommerce sector, to offset a decline in income from crude oil, and the move has industry experts concerned.

Stamp duty on PoS

The government, via the Central Bank of Nigeria (CBN) has also introduced a NGN50 stamp duty on PoS transactions exceeding NGN1000.

In a letter signed by Sam Okojere, CBN Director, Payments System Management Department, banks were authorised “to unbundle merchant settlement amounts and charge applicable taxes and duties on individual transactions as stipulated by regulators”.

Prior to this policy, charges occurred on aggregate transactions but the new policy stipulates Stamp Duties Payment on individual transactions that occur on PoS.

Official data showed over 146.3 million PoS transactions were carried out in Nigeria in 2017; the figures rose to 285.9 million transactions in 2018. From January to June 2019, a total of 187.7 million transactions were carried out, suggesting the number of transactions for 2019 is on track to exceed figures for 2018.

Moreover, a new tariff linked to the use of USSD for banking operations has been enforced as of 21 October and means that bank customers using the channel will pay NGN4 per 20 seconds.

There has been a public outcry over the tariff, especially after MTN sent SMS to inform its subscribers.

There are indications that more taxes could be introduced in Nigeria with senators proposing a 9% tax on communication services as an alternative to the proposed hike in VAT.

Source: IT Web Africa