Bolt Operations OU, a company appointed as a Non-Resident Supplier (NRS) by the Federal Inland Revenue Service (FIRS), has found itself at the center of a controversy regarding the collection of Value Added Tax (VAT) in Nigeria. The FIRS, through its Guidelines on Simplified Compliance Regime for VAT for Non-Resident Supplies, mandated Bolt Operations OU to charge and collect VAT on all invoices processed through its platform, regardless of whether the company is the supplier of the goods or services.
This directive from the FIRS was communicated to Bolt Operations OU through letters dated 26 July 2021, 4 February 2022, and 11 April 2022. However, the company has raised objections, arguing that it should be classified as a non-resident supplier/company (NRS or NRC) for VAT purposes since it is not incorporated in Nigeria. Bolt Operations OU maintains that its only taxable supply in Nigeria is connecting independent transporters and restaurants with customers on its platform.
According to the company, it charges a commission to the drivers and restaurants for this service and asserts that it is fully compliant with Section 10 of the VAT Act by remitting the VAT charged and collected on its commission. Bolt Operations OU believes that, as a non-resident supplier, it should not be responsible for collecting VAT on behalf of the actual suppliers of goods or services.
The issue of VAT collection by non-resident suppliers has been a topic of debate in Nigeria. The FIRS has taken steps to ensure compliance with VAT regulations, especially in the digital economy where non-resident suppliers operate. This move is aimed at ensuring that the government does not lose out on potential revenue from these transactions.
The FIRS argues that the VAT Act empowers it to appoint non-resident suppliers as tax collectors, irrespective of their incorporation status in Nigeria. The agency believes that the provision of connecting independent transporters and restaurants with customers on the Bolt platform qualifies as a taxable supply, and therefore, Bolt Operations OU should be responsible for collecting and remitting VAT on all invoices processed through its platform.
The disagreement between Bolt Operations OU and the FIRS has brought to the fore the need for clarity on the VAT obligations of non-resident suppliers in Nigeria. While the company maintains that it is fully compliant with the VAT Act, the FIRS insists that its directive is in line with the provisions of the law.
This issue has wider implications for the digital economy and the taxation of cross-border transactions. As more companies operate in the digital space, governments around the world are grappling with how to effectively tax these transactions and ensure compliance. The case of Bolt Operations OU highlights the challenges faced by tax authorities in keeping up with the evolving nature of the digital economy.
It remains to be seen how this dispute will be resolved. Both parties have valid arguments, and a resolution that takes into account the interests of all stakeholders will be crucial. In the meantime, the controversy surrounding the collection of VAT by non-resident suppliers in Nigeria continues to be a topic of discussion and debate.
In conclusion, the disagreement between Bolt Operations OU and the FIRS over the collection of VAT highlights the complexities of taxation in the digital economy. As governments strive to ensure compliance and collect revenue from cross-border transactions, it is essential to strike a balance that promotes fairness and encourages economic growth. The resolution of this dispute will be closely watched, as it has implications not only for Bolt Operations OU but also for other non-resident suppliers operating in Nigeria.
