Digital Tax: Presidency orders use of technology to tax digital transactions

President Muhammadu Buhari has ordered the use and deployment of technology to tax all digital transactions carried out across Nigeria in a bid to improve government earnings.

This was disclosed by the Secretary to the Government of the Federation (SGF), Mr Boss Mustapha at the 17th General Assembly and 10th anniversary of the West Africa Tax Administration Forum (WATAF) in Abuja on Tuesday, organised by the Federal Inland Revenue Service (FIRS), reported by the News Agency of Nigeria.

The SGF said the office of the Presidency ordered the FIRS to ensure digital transactions were taxed digitally, in a bid to achieve seamless digital collection and remittance of tax revenue accrued from the digital economy to improve revenue collection and remittance as a matter of government policy.

What the SGF said

“Nigeria is putting in place measures to ensure that we 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 side-track the ordinary and traditional understanding of jurisdiction,” he said.

Chairman of FIRS, Mr Mohammed Nami, said the importance of the role of WATAF could not be overemphasised because the reason it was set up by the founding fathers, was to create the atmosphere for dialogue on collaborative efforts, citing its theme for 2021, “The Taxation of the Digital Economy: Exploring Untapped Revenue Sources in Africa.”

“When you speak of taxing the digital economy, you are talking about an economy without physical borders, trade and commerce that transcends our natural geographical delineations.

“In terms of tax administration, the only way that this can possibly be done with any accuracy and effectiveness is if it is done digitally since the commercial activity itself is also done digitally.

“Tax regulators and other industry stakeholders must therefore rise up to the challenge of being in a position to tap into the stream of opportunity that advancements in science and technology afford us, ” he stated.