NIGERIA – About 20 basic food items in Nigeria have been added to the list of goods and services to be exempted from VAT under the Finance Law.
The new Act raised Value Added Tax from five per cent to 7.5 per cent.
A statement by Senior Special Assistant to the President on Media & Publicity, Office of the Vice President, Laolu Akande, said this was part of efforts to ensure that the cost of living did not rise for Nigerians because of the changes in the Value-Added Tax.
“To allay fears that low-income persons and companies would be marginalised by the new law, reduce the burden of taxation on vulnerable segments, and promote equitable taxation, the Finance Act 2019 has extended the list of goods and services exempted from VAT, the statement stated.
The statement gave the additional exemptions as, “Basic food items –additives (honey), bread, cereals, cooking oils, culinary herbs, fish, flour and starch, fruits (fresh or dried), live or raw meat and poultry, milk, nuts, pulses, roots, salt, vegetables, water (natural water and table water).”
Among other benefits, the statement said the law would consolidate efforts already made in creating an enabling environment for improved private sector participation and contribution to the economy as well as boost state revenues.
According to the Presidency, Nigeria’s increased new VAT rate of 7.5 per cent was still the lowest in Africa, and the world.
It stated that South Africa’s VAT was 15 per cent; Ghana; 12.5 per cent; Kenya, 16 per cent; Egypt, 14 per cent; Rwanda, 18 per cent; and Senegal had 18 per cent.
Under Nigeria’s revenue sharing formula, 85 per cent of collected VAT would go to states and local governments.
This means that the bulk of additional VAT revenues accruing from the increase will go towards enabling states and local governments to meet their obligations to citizens.
The other products that would be exempted from the new VAT included services rendered by microfinance banks, tuition fees relating to nursery, primary, secondary and tertiary education.
Also added on the list are, locally manufactured sanitary towels, pads or tampons.