On February 1st, 2020, the Nigerian businesses set-off the implementation of the 7.5% Value Added Tax (VAT) rate, following the introduction of a Finance Bill signed the country's president.
Among other changes to Nigeria's fiscal laws, the bill changed the rate of Value Added Tax (VAT) from 5% to 7.5%.
The Association of Licensed Telecommunications Operators of Nigeria (ALTON) had notified customers that it will adjust all purchased telecommunication products and services to reflect the 7.5% VAT regime, according to a statement released last week.
Nigerians slam government over the reflection of the new VAT rate on telecommunication products
With these reflections, Nigerian users on Twitter lamented on the applicability of new VAT charges on telco products despite crippled mobile networks. They are angry because the federal government had promised them that the new VAT will not 'affect ordinary Nigerians'.
Apart from the telcos charges, the new VAT rate also applies to utility charges, stockbroking, banking products, among others.
Finance Act will aid ease of doing business in Nigeria - FIRS Boss, Nami
Against this backdrop, Muhammad Nami, the Executive Chairman of the FIRS, said the overall reaching goal of the 2019 Finance Act is to create an environment for ease of doing business in Nigeria.
At the 9th Country Correspondents Meeting and ATAF 1st Experts Meeting on Taxation of the Informal Sector on Tuesday in Abuja, Nami explained that the Finance Act would help the ease of doing business especially for small businesses, noting that “the Act exempts businesses with annual turnover of 25 million Naira and below from charging Valued Added Tax …”
Some items exempted from the Finance Act
a. Brown and white bread;
b. Cereals including maize, rice, wheat, millet, barley, and sorghum;
d. Flour and starch meals;
e. Fruits, nuts, pulses and vegetables of various kinds;
f. Roots such as yam, cocoyam, sweet and Irish potatoes;
g. Meat and poultry products including eggs;
i. Salt and herbs of various kinds; and
j. Natural water and table water.
k. Parmaceuticals and basic commodities.
l. Locally manufactured sanitary towels, pads or tampons.
m. Services rendered by microfinance banks
n. Tuition relating to nursery, primary, secondary and tertiary education.
- The Act also exempts MSMEs from VAT registration, pegging it below N25 million in turnover per year. The government said this will allow revenue authorities to focus their compliance efforts on larger businesses.