President Muhammadu Buhari on Tuesday proposed a Finance Bill for consideration and passage by the lawmakers.
The bill is expected to amongst other things amend the existing Value Added Tax law rising VAT from 5% to 7.5%,
He disclosed that the “2020 Appropriation Bill is based on this new VAT rate. The additional revenues will be used to fund health, education and infrastructure programmes”
Section 46 of the Finance Bill, 2019 expands the item exempted under the old law to include 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;
Others include yam, cocoyam, sweet and Irish potatoes; Meat and poultry products including eggs; Milk; Salt and herbs of various kinds; and Natural water and table water.
The new bill, according to the President, has five strategic objectives, amongst them, achieving incremental, but necessary, changes to the country’s fiscal laws.
“The bill is expected to Promote fiscal equity by mitigating instances of regressive taxation; Reforming domestic tax laws to align with global best practices; Introducing tax incentives for investments in infrastructure and capital markets; Supporting Micro, Small and Medium-sized businesses in line with our Ease of Doing Business Reforms; and Raising Revenues for Government.
The President noted that the “draft Finance Bill proposes an increase in the VAT rate from 5% to 7.5%.
“States and Local Governments are allocated 85% of all VAT revenues, we expect to see greater quality and efficiency in their spending in these areas as well.
“The VAT Act already exempts pharmaceuticals, educational items, and basic commodities, which exemptions we are expanding under the Finance Bill, 2019.
“Additionally, our proposals also raise the threshold for VAT registration to N25 million in turnover per annum, such that the revenue authorities can focus their compliance efforts on larger businesses thereby bringing relief for our Micro, Small and Medium-sized businesses.
“It is absolutely essential to intensify our revenue generation efforts. That said, this Administration remains committed to ensuring that the inconvenience associated with any fiscal policy adjustments, is moderated, such that the poor and the vulnerable, who are most at risk, do not bear the brunt of these reforms.
