New VAT Implementation To Commence on February 1, 2020
Nigeria’s federal government is set to commence the implementation of the new Value Added Tax (VAT) with effect from February 1, 2020. The rate increases from 5% to 7.5%
According to the Honourable Minister of Finance, Budget and National Planning, Mrs. Zainab Shamsuna Ahmed, the VAT increase is a part of the tax reforms included in the 2019 Finance Act and is meant to help government achieve its revenue projections of N8.155trillion for the 2020 Budget.
Nigeria introduced Value Added Tax in December 1993 via the VAT Act 1993.
VAT is administered by the Federal Inland Revenue Service (FIRS). Import VAT is administered and collected by the Customs Services.
The Finance Bill 2019 was presented to the National Assembly by President Muhammadu Buhari on October the 14, 2019 along with the 2020 Executive Budget Proposals and 2020 Appropriation Bill.
The President said, during the presentation that the bill, when passed into law, will fulfil five strategic objectives, “in terms of achieving incremental, but necessary, changes to our fiscal laws.”
The major highlight of the bill was the review of the VAT rate from 5% to 7.5%. The reform of the country’s domestic tax laws is to align with global best practices (such as taxes of digital business and e-commerce) and introduction of tax incentives for investments in infrastructure and capital markets.
On Monday (January 13, 2020), the President gave his assent to the bill to kick off a new tax regime in the country.