The federal government has announced that the commencement of the implementation of Value Added Tax (VAT) is to take effect from February 1, 2020, after all the necessary administrative procedures have been completed.
The Honourable Minister of Finance, Budget and National Planning, Mrs. Zainab Shamsuna Ahmed, on Thursday recalled that the VAT increase which is meant to help government achieve its revenue projections for the 2020 Budget (N8.155trillion) is a part of the tax reforms included in the 2019 Finance Act.
“With the Act, there will be more revenue to finance key government projects especially in the areas of health, education and critical infrastructure”.
The minister explained that among the Finance Act strategic objectives is to provide support for micro, small and medium Enterprises (MSMEs) in line with the ease of doing business reforms such as VAT threshold.
“We planned that, going forward, the annual budget will always be accompanied by Finance Bills to enable the realisation of revenue projections”.
“Future Finance Bills will therefore also provide us with additional opportunities to incrementally improve the fiscal policy and regulatory/legal environment in order to further strengthen our domestic capital market, and ultimately ensure sustained and inclusive growth and development.”
According to the minister, the finnace act present various economic measures which include: expanding the list of VAT-exempt items, Introducing 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 N25million and N100million per annum.); and exempting micro-firms (with turnover of less than N25million per annum) from payment of CIT.