Tax - Afrikan Heroes

45 Million Nigerians Set To Be Taxed For Every Online Transaction

May 20, 2019

The rush after sources of taxation is not yet over for the Nigerian government. Next on the line of taxation is online transactions. And Nigerian Federal Inland Revenue Service (FIRS), an agency of government responsible for the collection of taxes in Nigeria is not going to do so by deploring tax police after physical businesses. It is going to come by way of demanding Nigerian banks to put a Value-Added Tax (VAT) on every online transaction they are processing on behalf of their customers.

“Not that it is something new; it actually should be in existence.
“We will certainly follow up to make sure that every VAT that is due to be collected is collected. Soon, we will ask banks to impose VAT on online transactions for purchases of goods and services,”the Chairman of the agency, Mr Babatunde Fowler said.

Nigeria’s Revenue History Over The Years

‘’We Are Going After Everybody’’

Hard day for online purchasers in Nigeria. Expect an extra deduction each time you purchase goods or services online, local or international.

The Nigerian agency has further explained that it is hustling hard to meet its N8 trillion revenue target for 2019. And it doesn’t stop with online purchasers.

The FIRS also seriously wants to increase Nigeria’s current tax population to 45 million. To do that, it would be relying on multiple information sources, Mr Fowler said. And that would include invading the country’s Bank Verification Number database and other related agencies with relevant information.

“We are going after everybody. I am sure you have heard that we have placed lien on some accounts of defaulters that have a billion naira turnover annually. So certainly, we are not leaving anyone out of the tax net,’’ he said.

Voluntary Asset and Income Declaration Scheme (Nigeria’s Tax Amnesty Programme was launched in 2017) Is Going After Companies.

The programme gave tax defaulters in Nigeria a one-year period of grace to declare and settle their unpaid taxes. This appears to be a hard time ahead for most companies in Nigeria.

Most taxpayers are insisting that the scheme was just designed to eliminate them from business. Mr. Fowler said “administrative error” should take the blame arising from the huge number of accounts involved.

“Well, there is certainly one or two instances where we made administrative error, but when you are looking at over 50,000 accounts. There is a tendency that sometimes an error might be made. For those that we made errors on, I wrote them personally apologising and of course we lifted the lien on their accounts,” he said.

Also See: What NDIC New Insurance Cover Fund Would Mean For Bank Depositors

FIRS targets to generate between N750 billion and N1 trillion from the clampdown, which includes closure of defaulters’ bank accounts. So, it is either you obey the amnesty or you close down your business.

Key Insights Into Nigeria’s Debt Profile

External Debt in Nigeria averaged 9263.57 USD Million from 2008 until 2018, reaching an all time high of 29591.68 USD Million in the third quarter of 2018 and a record low of 3627.50 USD Million in the first quarter of 2009.

Compare the debt profile against Nigeria’s revenue

Charles Rapulu Udoh

Charles Rapulu Udoh, a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organisations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution and data analytics both in Nigeria and across the world.

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New Findings: Ethiopia Plans To Boost Her Economy With More Tax

May 9, 2019

Ethiopian authorities are resorting to more taxation to boost the country’s revenue, new report by the African Development Bank says. AfDB says in its findings that revenue collection in Ethiopia has increased significantly after the government implemented tax reforms.

Key Findings From The Report

The study found that the introduction of electronic cash registers in Ethiopia increased value added tax (VAT) collections and payments by about 32%. This increase can be considered large, the bank said.

However, given the lack of capacity by many Ethiopians to pay tax, government is looking beyond the current reforms to third-party information on taxpayers, promoting electronic tax filing and payment systems, and enhancing analytical capacity using comprehensive national databases.

Another study however revealed that the threat of companies and businesses being audited by the government of Ethiopia could increase tax payments by 38%, while moral persuasion could increase collections by 32%.

The findings are merely presenting alternative ways to increase taxation on businesses in Ethiopia.

The Role of The African Development Bank In This Regard

In this regard, the Bank conducted original research to evaluate the impact of major tax policy reforms in Ethiopia, in collaboration with the Ethiopian Development Research Institute (EDRI) and the Ministry of Revenue and the Ethiopian Customs Commission (formerly Ethiopian Revenue and Customs Authority).

The African Development Bank said it would provide technical assistance to support the authorities in implementing the research findings.

Also See: Finding Money In The Bamboo: Ethiopia Signs New Deal With China

The assistance will complement ongoing advisory services to support reforms, notably to the Public-Private Partnerships Framework and the logistics sector.

Additional assistance is being designed to advance financial sector development, industrial policy and strategy development, and the mining and petroleum sectors.

Beyond implementing the emerging policy recommendations, the Ethiopian government and the African Development Bank pledged to explore additional areas for impactful policy research on domestic revenue mobilization, in line with the mutual commitment to improving the quality of life of the people of Ethiopia.

The findings were revealed at a workshop hosted by the African Development Bank and a high-level delegation from the Ethiopian government. The workshop formed part of the Bank’s commitment to helping the government fund its ambitious development plans.