Internet Transactions To Attract Tax, Yet CAC, Inland Revenue Registrations Experience Disruptions
The Oasis Reporters
August 27, 2019
Vice president Yemi Osinbajo had a strategic plan when he suddenly instructed that the cost of business name registration be reduced from 10,000 naira, to 5,000 naira, while the cost of registration of limited liability companies was equally scaled down.
At the expiry of the date for the window to end, it was extended, and yet again, extended. Osinbajo wanted one thing: Move most businesses to the formal sector, know them all, and tax them.
The idea is that once a business is inaugurated and registered, they’d get a Tax Identification Number, TIN. When the chips are down, businesses must pay VAT, apart from taxes, and the winner is the Federal Inland Revenue Service of the country.
But trust the hubris in the Nigerian factor. Something that grinds every forward movement to a halt and impede progress.
Have you tried to register a company or an enterprise in Nigeria recently ?
Well, the news is so depressing. The Corporate Affairs Commission has refused to work for weeks now. It is inaccessible.
Assuming you needed a personal Tax Identification Number, try for instance, the one in the Oyo State Secretariat: The very courteous staff will tell you, “sorry sir, sorry ma, our site is undergoing maintenance at the moment. Check back in two months!”
Little wonder, the ease of doing business in Rwanda is number 1 in Africa, and very awful in Nigeria where your eagerness and willingness to even pay tax to government is frustrated by government workers.
Meanwhile, Executive Chairman of the Federal Inland Revenue Service, Babatunde Fowler, has said that the agency will begin to impose value-added tax on Internet transactions both domestic and international with effect from January 2020.
Fowler, made the revelation on Monday at the African Tax Administration Forum in Abuja.
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.”
Wonderful thoughts there, but implementation shall be the hiccup.