Could Nigeria’s E-Commerce Stimulus Plans be a means to outflank the ‘Southern Governors’ VAT decentralization efforts?

Could Nigeria’s E-Commerce Stimulus Plans be a means to outflank the ‘Southern Governors’ VAT decentralization efforts?

The Federal Government has said that it is targeting an increase in e-commerce trading, from the current market value of $13bn to about $75bn by 2025. The Permanent Secretary, Ministry of Industry, Trade and Investment, Dr Evelyn Ngige, disclosed this on Tuesday in Abuja at the second National E-commerce Roundtable.The statements were made on Ngige’s behalf by the Director, Commodities and Export Department, Suleiman Audu.

However Prof Ndubuisi Ekekwe has produced an interesting article for Tekedia Institute yesterday entitled:  ‘Buhari’s Legacy And Great Unification of Southern Nigerian Governors‘ In the article, Ekekwe muses on a Presidential ‘own goal’ following with a verbatim quote of the ‘meeting of the governors of Southern Nigerian in the Government House, Enugu, yesterday (16 September):

Southern Governors 16 September 2021 at Enugu

‘ #3. Reaffirmed its earlier commitment to fiscal federalism as resolved at the inaugural meeting of the Forum held on Tuesday, 11th May 2021 at Asaba, Delta State and emphasized the need for the Southern States to leverage the legislative competence of their respective State Houses of Assembly as well as representation in the National assembly to pursue its inclusion in the Nigerian Constitution through the ongoing constitutional amendment.

#4. Following from paragraph “3” above, the meeting resolved to support the position that the collection of VAT falls within the powers of the States.’

Conceivably, since E-Commerce transactions actually take place in ‘The Cloud’, it can be an interpretation by FGN that such transactions do not enjoy the jurisdiction of any specific state within the Federation.

This is irrespective of where any E-Commerce business chooses to site its physical activities, such as its administrative HQ, its distribution management or its warehousing (as applicable).

Over time, more and more shopping in Nigeria will be done online. Should FGN ultimately lose the legal war with individual States on VAT jurisdiction, FIRS (Federal Inland Revenue Services) may claw back VAT on online sales, interpreting them to be ‘extra-state’ in nature.

Is it any wonder then, that FGN may find a renewed eagerness and enthusiasm for virtual trade?

However, parallel to this we know that there are quiet but concerted efforts to end the Twitter ban:

‘I can tell that we’re just actually talking about a few, just a few more days now.’  said the Minister of Information and Culture, Lai Mohammed, while briefing journalists at the State House in Abuja on Wednesday.

The Minister of Information and Culture, Lai Mohammed

The question is, should FGN argue the jurisdiction of E Commerce trade as being the preserve of FIRS in respect of VAT, wrestling it back from States…Does this set a dangerous precedent in FGNs delicate efforts to secure income from Social Media Moguls?

If FGN establish the jurisdiction of  E Commerce trade as being ‘extra state’…

What is to stop the social media moguls to cite the case, and use the same argument to establish that their operations are indeed, ‘extra-sovereign’ ?

For now, at least, multiple final outcomes are unclear.

We might say, its a bit up in the clouds!

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One thought on “Could Nigeria’s E-Commerce Stimulus Plans be a means to outflank the ‘Southern Governors’ VAT decentralization efforts?

  1. All these shenanigans are predicated on the quest to avoid productivity and real value creation…that’s the reason why everyone is angling for the easy cheddar…

    VAT is a consumption tax, payable by consumers…

    Here in Nigeria, this important point is missing, all systems are levelling this tax on all and sundry, business are not supposed to pay VAT, instead they are allowed to do input and output thus getting refund when they have paid more and remitting to the government coffers when the opposite occurs…I have never heard of any business that received cheque from government on VAT refund, have you?

    Finally, cloud or not, where your physical address is domicile should be where taxes should be collected otherwise many will set the cloud office inside “Bermuda Triangle” we all know that it’s a no-go area…


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