The Federal Inland Revenue Service (FIRS) has indicated its intention to collaborate with the Central Bank of Nigeria (CBN) to track Value Added Tax (VAT) payments made electronically by foreign entities not registered in the country.
This is one of the strategies being considered by the revenue agency in a document it submitted to the National Assembly as part of its measures to growth its revenue collections, particularly VAT, from 2019 to 2021 fiscal year.
Noting the recent growing volume in online purchases of goods and services from foreign entities that are not registered in Nigeria which are subject to VAT based on the subsisting VAT legislation but are not currently tracked, the FIRS is urging the Ministry of Finance to work with the CBN to help come up with the modalities of installing software that could track these transactions.
According to the agency, the yet-to-be-developed software will support the e-VAT payments by the affected foreign entities using Interswitch, Nigerian Interbank Settlement System (NIBSS), Master Card and Visa gateways, among others.
Similarly, the FIRS is also seeking the Minister of Finance’s support in the interpretation of the provisions of Section 38 of the VAT Act by issuing a regulation which would expand the scope of “goods and services” as provided in the law to include land, buildings and oil wells.
This is even as the agency, in the document submitted to the Legislature, seeking that the meaning of “services” in the Act should be expanded to include intangibles and digital items such as software through official gazette.
Also, the Service is also seeking the review of existing tax laws with a view to remove the legal loopholes for taxes by adopting a sectoral, rule-based approach in its tax collections.
Other strategies targeted to boost revenue in the agency’s strategic revenue growth initiatives document now before the National Assembly include, the expansion of Tax Identification Number database to cover federal, states and local governments.
The Service projected that the TIN database expansion would help in creating a credible VAT tax base on all payers nationwide.