Nigerians will now start paying
7.5 percent as Value Added Tax (VAT) after its increase was captured in the
newly approved 2019 finance law.
President Muhammadu Buhari on
Monday in Abuja signed the 2020 Finance Bill into law, increasing it from an
initial 5 percent.
A statement by the Special
Adviser to the President on Media and Publicity, Femi Adesina explained that
the Finance law has five strategic objectives, in terms of achieving
incremental, but necessary, changes to our fiscal laws.
“These objectives are; Promoting
fiscal equity by mitigating instances of regressive taxation; Reforming
domestic tax laws to align with global best practices; Introducing tax
incentives for investments in infrastructure and capital markets; Supporting
Micro, Small and Medium-sized businesses in line with our Ease of Doing
Business Reforms; and Raising Revenues for Government.
“The draft Finance Bill proposes
an increase of the VAT rate from five percent to 7.5 percent, as such, the 2020
Appropriation Bill is based on this new VAT rate,” he added.
The Federal Government had in
September 2019, announced plans to review the VAT through consultations at
various levels in the country.
Minister of Finance Zainab Ahmed
who disclosed this, stated that the consultation will be with the states, local
governments, and the lawmakers as well as with the Nigerian public before the
VAT increase will take effect.
Mrs. Ahmed stressed that the VAT
increase will be more beneficial to state governments and Local Government
Areas (LGAs) in the country.
The new VAT rate is expected to
shore up Federal Government revenue and it is expected to be deployed to fund
health and education sectors as well as infrastructure projects.
Some food items have been
exempted from the new VAT including; Brown and white bread; Cereals including
maize, rice, wheat, millet, barley, and sorghum; Fish of all kinds; Flour and
starch meals; Fruits, nuts, pulses and vegetables of various kinds.
Others are; Roots such as yam,
cocoyam, sweet and Irish potatoes; Meat and poultry products including eggs;
Milk; Salt and herbs of various kinds; and Natural water and table water.
The Federal Government also plans
to raise the threshold for VAT registration to N25 million in turnovers per
annum, such that the revenue authorities can focus their compliance efforts on
larger businesses thereby bringing relief for Micro, Small and Medium-sized
businesses.
Channelnews
0 comments:
Kindly comment here!