President Muhammadu Buhari has
presented the Finance Bill to a joint
session of the National Assembly for
consideration and passage into law.
Mr Buhari made the presentation on
Tuesday alongside the 2020 Appropriation
Bill.
The bill, the president said, proposes an
increase in the Valued-Added Tax rate
from five per cent to 7.5 per cent.
Early this year, the federal government
constituted a presidential technical
advisory committee to profer advice on
ways to realise alternative sources of
raising funds for the implementation of
the new minimum wage by the
government.
In its report, the committee
recommended an increase in the VAT rate
from five per cent to 7.5 per cent. The
committee based its recommendation on
the observation that the prevailing VAT
rate in Nigeria is still about half the
African average and amongst the lowest
in the world.
It also said an increase in the VAT rate
will be more beneficial to state and local
governments, many of which are facing
difficult fiscal conditions.
The president, who described the
increment as necessary changes to the
fiscal laws, explained five strategic
objectives of the bill which include:
a. Promoting fiscal equity by mitigating
instances of regressive taxation;
b. Reforming domestic tax laws to align
with global best practices;
c. Introducing tax incentives for
investments in infrastructure and capital
markets;
d. Supporting Micro, Small and Medium-
sized businesses in line with the Ease of
Doing Business Reforms; and
e. Raising Revenues for Government.
“The draft Finance Bill proposes an
increase of the VAT rate from 5% to 7.5%.
As such, the 2020 Appropriation Bill is
based on this new VAT rate. The
additional revenues will be used to fund
health, education and infrastructure
programmes. As the 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. Specifically, Section 46 of the
Finance Bill, 2019 expands the exempt
items to include the following:
“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;
Roots such as 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,” he said.
Mr Buhari said the 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.
He stressed the need to intensify our
revenue generation efforts. He also said
his 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.”
Members of the National Assembly are
expected to consider and pass the bill
alongside the Appropriation Bill.
Young-po Reporters 