...Says Nigeria’s 7.5% VAT Rate Still The Lowest In Africa
...Agricultural Companies To Enjoy An Initial Tax-Free Period Of 5 Years
By Ogochukwu Isioma, Abuja
The Federal Government has excluded 20 basic food items, sanitary pads and other items from the new 7.5 per cent Value Added Tax (VAT) regime, Igbere TV reports.
Some of the items include Additives (honey), bread, cereals, cooking oils, culinary herbs, fish, flour and starch, fruits (fresh or dried), live or raw meat and poultry, milk, nuts, pulses, roots, salt, vegetables, water (natural water and table water).
Others are locally manufactured sanitary towels, pads or tampons.
The development comes barely a week after President Muhammadu Buhari signed the Finance Bill, 2019 into law, which he said promotes fiscal equity and supports Micro, Small and Medium-sized businesses.
A statement sent to Igbere TV on Sunday signed by Laolu Akande, in the office of the vice-president, said the move was to “ensure that the cost of living does not rise for Nigerians because of the changes in the VAT.”
According to him, several basic food items, locally manufactured sanitary towels, pads and tuition relating to nursery, primary, secondary and tertiary education were added to the exemption list of goods and services under the new law.
“Amongst other benefits, the law will consolidate efforts already made in creating the enabling environment for improved private sector participation and contribution to the economy as well as boost states’ revenues”, he said.
“The Finance Bill will support the funding and implementation of the 2020 Budget. We shall sustain this tradition by ensuring that subsequent budgets are also accompanied by a Finance Bill,” the statement quoted Buhari as saying.
The Finance Bill, 2019 was submitted to the National Assembly by Buhari alongside the 2020 Appropriation Bill, and signed into law by the President on January 13, 2020.
The Bill, now an Act, has the following objectives: (1) Promoting fiscal equity by mitigating instances of regressive taxation; (2) Reforming domestic tax laws to align with global best practices; (3) Introducing tax incentives for investments in infrastructure and capital markets; (4) Supporting Micro, Small and Medium-sized businesses in line with the administration’s Ease of Doing Business Reforms; (5) Raising Revenues for Federal, State and Local Governments.
Fact sheet on new Finance Act, 2019
The Finance Act, 2019 is the first legislation created to accompany an Appropriation Act since the return of democracy in 1999.
The new Act raises Value Added Tax (VAT) from 5 per cent to 7.5 per cent.
To allay fears that low-income persons and companies will be marginalized by the new law, reduce the burden of taxation on vulnerable segments and promote equitable taxation, the federal government exempted more goods and services from the new tax regime.
The additional exemptions include the following: (1) Services rendered by microfinance banks; (2) Tuition relating to nursery, primary, secondary and tertiary education.
“Nigeria’s increased new VAT rate of 7.5% is still the lowest in Africa, and one of the lowest anywhere in the world. (South Africa VAT: 15%; Ghana: 12.5%; Kenya: 16%; Egypt: 14%; Rwanda: 18%; Senegal: 18%).
“Under Nigeria’s revenue sharing formula, 85% of collected VAT goes to States and Local Governments. This means that the bulk of additional VAT revenues accruing from the increase will go towards enabling States and Local Governments meet their obligations to citizens, including the new minimum wage as already noted by State Governors. Before now, the Buhari administration had firmly resisted previous suggestions to raise VAT.”
Igbere TV reports that the new Finance Act exempts businesses with turnover below 25 million from VAT payments.”
Companies Income Tax (CIT)
Under the new law small companies – companies with less than N25 million in annual turnover are charged Zero CIT.
“CIT for Companies with revenues between N25 and N100m (described in the Act as “medium-sized” companies) has been reduced from 30% to 20%,” the statement said.
“Large companies – with annual turnover greater than N100m – will continue to pay the standard 30% CIT.”
“Nigeria’s increased new VAT rate of 7.5% is still the lowest in Africa, and one of the lowest anywhere in the world.
The new Act includes a provision that grants to all companies “engaged in agricultural production” in Nigeria “an initial tax-free period of five years”, renewable for an additional three years.
The new Act also provides incentives to promote tax compliance through bonus reductions in CIT for early remittance: (1) 2% bonus for medium-size companies; (2) 1% bonus for other companies.
Personal Income Tax Act
The new Act now includes “electronic mail” as an acceptable form of correspondence for persons disputing assessments by the Tax Authorities.
Contributions to Pension and Retirement Funds, Societies and Schemes are now unconditionally tax-deductible.
Stamp Duty Act
With the new Act, the N50 Stamp duty charge is now applicable only to transactions amounting to N10,000 and above, a significant increase on the former threshold of N1,000.
The new Act also expands the list of items exempted from stamp duty.
Customs and Excise Tariff
To reduce unfair advantages previously conferred on imported goods at the expense of locally manufactured ones, certain imported goods are now subject to excise duties similar to locally manufactured goods. http://igberetvnews.com/1270296/breaking-fg-excludes-sanitary-pads-bread-fish-salt-water-new-vat-regime/Lalasticlala Seun Mynd44 
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