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Business News of Wednesday, 22 September 2021

Source: www.sunnewsonline.com

FG to tax digital transactions

Secretary to the Government of Federation (SGF), Mr Boss Mustapha Secretary to the Government of Federation (SGF), Mr Boss Mustapha

Driven by the quest to expand its revenue base, the Federal Government yesterday said it is working out modalities to begin taxing digital transactions across the country.

It added that the move also helps in plugging loop- holes in the revenue generating ecosystem.

Secretary to the Government of Federation (SGF), Mr Boss Mustapha gave the hints on digital tax collection and remittances on Tuesday in Abuja at 17th General Assembly of the West African Administrations Forum (WATAF) and 10th year anniversary of the organisation themed: ‘The Taxation of the Digital Economy: Exploring Untapped Revenue Sources in Africa”.

Already, President Muhammadu Buhari and the Federal Executive Council (FEC) have approved the Federal Inland Revenue Service’s (FIRS) request to digitize tax collection and remittances in Nigeria; having seen the importance of its taxpro max, an inhouse technology that helped it rake in over N664 billion in

June 2021, the highest revenue in a single month since the COVID-19.

Mustapha recalled that over time, the importance of the internet has continued to grow, as it remains the back- bone of e-commerce.

The SGF said many electronic platforms that started as social media sites have since transited into big businesses generating significant income; as it has since become commonplace for entities to consummate business relations remotely, without a physical presence in the countries where goods and servIces are exchanged.

“In other words, the traditional brick-and-mortar business is now very much up against an entirely different business model. Suffice to say that while this presents great economic and business opportunities on the one hand, it also presents a challenge on the other as Governments must find their way around what is still very much an emerging area of tax administration”.

“Digital transactions must be taxed digitally and the goal of our efforts must be to achieve seamless digital collection and remittance of tax revenue that accrues from the digital economy. The President of the Federal Re- public of Nigeria, President Muhammadu Buhari, has given impetus to this drive by directing the deployment of technology to good effect in revenue collection and remittance as a matter of Government policy”.

“In addition, the apex tax authority in Nigeria, the Federal Inland Revenue Service has received the unalloyed support and backing of Mr. President and the Federal Executive Council, in its efforts towards digitalization of the tax collection channels in particular and tax administration process in general. This is supported by the amendment to the tax laws and empowering the tax authority to deploy technology in tax” , he explained.

He said the government was putting in place measures to ensure that it keep up to date with these developments and answer the question of what to collect and how to collect it, as far as the digital economy is concerned.

“Therefore, our definition of what to collect-whether we call it income tax, Digital Service Tax or Value Added Tax, must address the issue of redefining who a taxable person or entity is, to accommodate the fact that digital transactions sidetrack the ordinary and traditional understanding of jurisdiction. In addressing this question, Nigeria is constantly reviewing its domestic laws to identify changes required to bring the digital economy to taxation in country. The Finance Bill 2019, signed by President Muhammadu Buhari in January, 2021, seeks to broaden the triggers for domestic taxation of income earned by non-resident companies in the country through dependent agents and via online platform. Also, Nigeria is participating in the ongoing discus- sions with many tax related bodies, such as the OECD, UN Tax Experts Committee, ATAF, ECOWAS, WATAF etc. to explore global solutions to the tax challenges of the digitalization of the economy”, said the SGF.