Key highlights of bill proposing increase in VAT
Nigeria's Senate on Thursday passed the Finance Bill after it scaled through the third reading on the floor of the Senate.
The bill among others seeks to raise the country's Value Added Tax (VAT) from 5% to 7.5%. The 2020 budget is also based on the VAT increase.
President Muhammadu Buhari, while presenting the bill to the National Assembly in October, said the bill has five strategic objectives, in terms of achieving incremental, but necessary, changes to Nigeria's fiscal laws.
The bill will also reform the tax regime by amending several Acts, namely Petroleum Profit Tax Act (PPT), Custom and Excise Tax Act, Company Income Tax Act (CITA), Personal Income Tax Act, Value Added Tax Act, Stamp Duties Tax Act, and Capital Gains Act.
Here are key highlights from the bill:
Section 46 of the draft Finance Bill 2019 expands the exempt items such as 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.
The VAT Act already exempts pharmaceuticals, educational items, and basic commodities.
The bill also exempts MSMEs companies whose turnover is below N25 million.
The Nigerian government said this will allow revenue authorities to focus their compliance efforts on larger businesses.
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