FIRS, CBN to Keep Track Record on VAT by Foreign Entities
The Federal Inland Revenue Service is seeking the support of the Central Bank of Nigeria to track payment of Value Added Tax made electronically by foreign entities that are not registered in Nigeria.
The agency said this in a document detailing its strategic revenue growth initiatives for 2019 to 2021 which was submitted to the National Assembly.
The strategic revenue growth initiatives are measures aimed at boosting revenue through taxation, particularly VAT.
There has been an increase in online purchases of goods and services from foreign entities that are not registered in Nigeria.
These transactions are subject to VAT payment under the current VAT legislation. The payment of VAT on these transactions is made electronically making huge tax revenue to be lost due to the inability of the FIRS to track and charge VAT on these transactions.
To address this loophole, the FIRS according to the document which was submitted to the lawmakers, is urging the Ministry of Finance to work with the apex bank to fashion out modalities of installing software that could track these transactions.
The service said the software would perform the task electronically through payment gateways such as Interswitch, Nigerian Interbank Settlement System, Master Card and Visa among others.
The service also called on the minister of finance to leverage the provisions of Section 38 of the VAT Act to issue a regulation which would expand the meaning of “goods and services” to include land, buildings and oil wells.
In addition, it said the meaning of “services” in the Act should be expanded to include intangibles and digital items such as software.
The service said such regulation should be gazetted by the Ministry of Finance.
Other strategies to shore up tax revenue are the expansion of Tax Identification Number database to cover federal, states and local governments. This is expected to establish a reliable VAT tax base across the country.
There is also a plan to review existing tax laws to close the legal loopholes for taxes by adopting a sectoral, rule-based approach.
The service is also considering developing a unified nationwide taxpayer database as well as review collections of surcharge on international ticket purchase at the point of sale.