Business
Just In: 7.5% VAT Implementation To Finally Commence February 1, 2020
The federal government of Nigeria has said the commencement of the implementation of the new Value Added Tax (VAT), 7.5 percent, is to take effect from February 1, 2020, after all the necessary administrative procedures have been completed, especially the Gazette of the recently signed 2019 Finance Act by the Federal Ministry of Justice.
This development was confirmed by the Minister for Finance, Budget and National Planning, Mrs Zainab Ahmed, via a statement issued on Thursday, January 16, 2020, by her Special Adviser, Media and Communication, Mr Yunusa Tanko Abdullahi, and obtained by Ekohotblog.
Recall the VAT increase, which is meant to help government achieve its revenue projections for the 2020 Budget (N8.155 trillion), is a part of the tax reforms included in the 2019 Finance Act.
With the Act, there will be more revenue to finance key government projects especially in the areas of health, education and critical infrastructure.
Among the Finance Act strategic objectives is the supporting of micro, small and medium Enterprises (MSMEs) in line with the ease of doing business reforms such as VAT threshold.
Also recall that the Finance Act also takes care of essential palliatives to support MSMEs and mitigate the impact of the VAT rate increase on the most vulnerable businesses, communities and citizens in the economy.
Some of these measures include expanding the list of VAT-exempt items (e.g. basic food items, educational materials and medical supplies); Introducing a VAT registration threshold for MSMEs with a turnover of less than N25 million per annum; Reducing the corporate tax rate for MSMEs from 30 percent to 20 percent for Small firms (with turnover of between N25million and N100 million per annum.); and exempting micro-firms (with turnover of less than N25 million per annum) from payment of CIT.
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