Baby products, sanitary pads, and food items exempt from VAT in tax bill

The 2024 Nigeria Tax Bill has proposed value-added tax (VAT) exemptions on items such as baby products, locally manufactured sanitary pads, and household food items. 

Section 187 of the bill, which recently passed its second reading at the National Assembly, propose exemptions for approximately 14 items from Value Added Tax (VAT). According to Section 188, zero percent VAT was proposed on another 18 items, including compressed natural gas (CNG) and household cooking gas equipment. 

According to the bill, the list of items that are VAT-exempt include; 

Oil and gas exports, feed gas for gas processing, baby products, locally manufactured sanitary pads, towels, and tampons, military hardware including arms, and locally manufactured uniforms for armed forces and para-military agencies. Road transport services, plays and performances by institutions of learning, land or buildings, as well as financial securities are also VAT-exempt. According to the bill, purchase and hire of agricultural equipment such as ploughs and tractors would also be VAT-exempt.  

In Section 188 of the bill, certain items would be charged to VAT at a rate of zero percent, including;  

Basic food items such as  

• Locally produced honey 

• Bread (white and brown) 

• Cereals in the form of grain, flour, and crop 

• Cooking oils that are without fragrance 

• Culinary herbs,  

• All kinds of fish (live, fresh, frozen, smoked, and dried) 

• Flour and starch including corn flour, plantain flour, cassava flour, beans flour, wheat flour, rice flour, yam flour, and cassava flakes (garri).  

• Fruits, either fresh or dried. 

• Milk, whether fresh or processed 

• Nuts such as groundnut, walnut, cashew nut, hazelnut, kolanut, tigernut, and coconut.   

Other items with zero percent VAT according to the bill include all medical and pharmaceutical products including medicinal herbal products, educational books and materials, fertilizers, locally produced agricultural chemicals, locally produced veterinary medicine, locally produced animal feeds, agricultural seeds and seedlings, medical services, tuition fee (primary, school, and tertiary schools), exported goods and services, and medical equipment.  

Electricity sold to the Nigeria Bulk Electricity Trading Company (NBET) by the GENCOs and the electricity sold by TCN to the DISCOs will also have a zero percent VAT charge.  

According to the bill, baby products refer to products made for the use of babies from birth to three years of age, including, baby activity and entertainment products, sanitary wares, feeding products such as feeding bottles, feeding bottle warmers, and baby clothing.  

If the bill is passed, VAT will increase to 10 percent, from the current 7.5 percent until December 31, 2025. From January 1, 2026, to December 31, 2029, the VAT will be 12.5 percent, and from 2030, it is expected to rise to 30 percent.