On Monday, President Muhammadu Buhari signed the Finance Bill 2019 into law, approving the 50 percent in the value added tax (VAT) from 5 percent to 7.5 percent.
On Tuesday, the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, released a statement through her media aide, Mr Yunusa Tanko Abdullahi, listing some items exempted from VAT under the new law.
She listed these commodities as basic food items (agro and aqua based staple foods) such as additives, cereals, cooking oils, culinary herbs, fish of all kinds (other than ornamented), flour and starch, fruits, live or raw meat and poultry, milk, nuts, pulses, roots, salt, vegetables, and water; locally manufactured sanitary towels, tuition (primary, secondary and tertiary education); and services rendered by microfinance banks.
The Minister described the Finance Bill as a peoples bill “considering the expansion of VAT exemption list,” noting that “a large sum of money realised from the taxation would rather go to the people; the states and the Local Governments Areas (LGAs) are to get 50 percent and 35 percent respectively while only 15 percent will go to the federal government.”
Mrs Ahmed also said the finance act has “taken 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.”
According to her, to make life better for small business owners, government introduced “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 N25 million and N100 million per annum.); and exempting micro-firms (with turnover of less than N25 million per annum).”
The Minister commended President Muhammadu Buhari for ensuring that “the strategic objectives in the finance bill recognise the crucial relationship between fiscal policy, the regulatory environment and the strong capital market we all seek to effect in Nigeria.”