The Federal Government hopes to generate a total of N20billion from the e-commerce subsector annually.
Making this disclosure at the weekend was Mr. Segun Ebozoje, Chief Executive, Gention Global Resources Limited, he spoke at a public forum in Lagos.
Ebozoje, whose firm has been engaged by the Federal Inland Revenue Service (FIRS) to design an automated system to aid the collection and remittance of Valued Added Tax from the e-commerce businesses, said it is part of the Federal Government’s strategy to generate revenues from every sector of the economy in order to boost the country’s gross domestic product (GDP).
According to him, the Federal Government will generate a total of N20billion revenue from e-commerce businesses when the automated remittance system kicks off.
He however stressed the need for the signing of a tripartite agreement involving the e-commerce businesses, the banks and FIRS in making the process of automated VAT remittance possible.
Gention’s legal representative led by Miss Nkem Okuoyibo also gave an overview of the tax laws with special emphasis on VAT as it applies to a company’s obligation in the collection and remittance of VAT to the Federal Government.
Ebozoje further explained the roles of each party which include the need for the operators to submit a direct debit mandate to its bank to enable the latter debit the operators’ account at source as applicable, and the FIRS obligation to providing information on the amount due as VAT on a daily basis through the help of the automated VAT remittance system.
As part of efforts to achieve this, a stakeholders’ forum was called to entertain concerns of stakeholders ahead of the implementation of VAT deduction at source from the e-commerce sector.
At the maiden stakeholders’ forum representatives from FIRS, Jumia, Konga, InterSwitch, eTranzact, KPMG, NIBSS, and Gention were in attendance as they proffered solutions to foreseeable challenges that could impede the process.
Mr. Ikenna Amanje of KPMG stressed the need to take into account the input and output VAT of the operators when developing the VAT automation system. Other speakers raised issues as to what proportion of VAT collected should the operators remit to government stating that the sector is not like the service industry, and as such remitting all the 5% of transaction to government would amount to short changing the operators. Mr. Sam Awogun of FIRS however insisted that 5% per transaction should be collected, and that the operators may apply for refund of their input VAT as is currently practiced.
Mr. Olajide Adamolekun of Konga , Miss Adedamola Jaiyeoba and Mr. Seyi Oni of Jumia, all raised concerns about the refund policy of the FIRS. Mr Olajide emphasised the impact withholding or delaying the refund of input VAT would have on their business operations. Members were undecided as to how VAT should be computed for the automated VAT remittance system.