Simplified VAT compliance for foreign e-services and goods sellers & marketplaces
Nigeria has secured the obligation for non-resident providers of goods or digital / electronic services to consumers to register and charge VAT. The follows the example of around seventy countries to implement collections role for VAT and GST on foreign providers or marketplaces for sales to in-country consumers. It is introducing simplified compliance procedures for non-resident providers of digital services from 1 January 2022. These will also be available for foreign sellers or marketplaces for goods from 1 January 2024.
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Nigeria had already introduced VAT on B2C sales in February 2020. But this has now been extended: sales to Nigerian consumers must include local VAT, requiring a VAT registration with the Federal Inland Revenue Service (FIRS); B2B sales will require the Nigerian customer to withhold the VAT and pay directly to FIRS. Therefore if the provider is only making B2B sales, then it will not have to VAT register.
What digital services and physical goods liable to Nigerian VAT?
The Federal Inland Revenue Service makes the following definitions:
- supplies, through digital means, of goods, services, intangibles and other digital products by persons not physically present, located or represented in Nigeria
- It covers both B2B and B2C
In addition to the underlying suppliers, marketplaces and similar intermediaries may be held responsible for the VAT liabilities. This would require them to VAT register, collect and remit the taxes from Nigerian customers.
Nigeria expects VAT registered business to issue compliant electronic invoices – note an application may be made for delaying this obligation – which should include the following:
- Name and TIN of the supplier
- Description of the goods or digital services
- VAT liability
VAT registration threshold
There is a $25,000 VAT registration threshold after which a foreign providers must register immediately in the case of B2C sales. There is no simplified VAT registration process or reduced VAT return set until 2022. They may apply for a Tax Identification Number (TIN) from FIRS. They may choose to appoint a local VAT agent if they wish to assist with reporting and compliance.
Once registered, returns are expected to be filed on a monthly basis. They are due, along with VAT payment, by the 21st of the month following.
Determining if Nigerian VAT is due
Any provider or liable intermediary must establish if the place of consumption is Nigeria, and VAT therefore due. They may reply on the following:
- Customer billing address
- Customer incorporated in Nigeria
- Nigerian IP address
- Any other similar evidence
Digital services subject to Nigerian VAT
Services covered include any intangible or services delivered via electronic or digital means or similar networks, whose supply is essentially automated, involves minimal human intervention, and is impossible to ensure in the absence of information technology. This excludes broadcast and telecommunications services.
Services covered shall include but not limited to:
- Streaming, downloading or access to digital content including movies, music, e-books, magazines, news, applications, games, library services or like services;
- Online gaming;
- Online ticketing excluding international air travels and freight charges;
- Online betting services;
- Online intermediation platform services, including online marketplaces, payment platforms, ride hailing, travel and accommodation booking, rental services or like services;
- Online advertising services;
- Subscription based social media platforms including video conferencing applications, instant messaging, chat, dating, image/video sharing or like services;
- Standardised online education services such as e-learning, webinars or like services;
- Cloud computing services including cloud storage services;
- Auction services;
- Automated online professional and consultancy services
- Online stores; and
Africa & Middle East VAT on digital services
|Comments (click for details)||Rate||Date||Threshold||Comments|
|Cameroon||19.5%||Jan 2020||XAF 50 million|
|Egypt||14%||Sep 2016||EGP 500,000|
|Ghana||12.5%||Apr 2022||GHS 200,000|
|Kenya||16%||Sep 2013||-||Registration threshold removed 2023|
|Oman||5%||Apr 2021||OMR 35,000|
|Saudi Arabia||15%||Jan 2018||Nil|
|Senegal||18%||Jan 2023||Nil||Fiscal representative required|
|South Africa||15%||Jun 2014||ZAR 1 million|
|Tanzania||18%||Jul 2022||Nil||Residents since Jul 2015|
|Tunisia||19%||Jan 2020||Nil||Withholding VAT; 3% Royalty Tax|
|Uganda||18%||Jan 2020||UGX 150m|
|United Arab Emirates||5%||Jan 2018||AED 375,000|