- President Muhammadu Buhari has signed the new Finance Bill into law
- The Finance bill increases of the VAT rate from 5% to 7.5%.
- The 2020 Appropriation Bill is based on this new VAT rate
On Monday, January 13th, 2020, President Muhammadu Buhari signed the new Finance Bill into law.
Earlier, the country's National Assembly passed the bill on November, 21st, 2019.
Recall that President Buhari, while presenting the 2020 Appropriation Bill to the National Assembly, had also presented the Finance Bill and said: “This Finance Bill has five strategic objectives, in terms of achieving incremental, but necessary, changes to our fiscal laws.
“These objectives are; Promoting 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 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,” he added.
The new tax law will finance key government projects, especially in the areas of health, education, and critical infrastructure, according to the government.
Here are key highlights from the bill
- Section 46 of Finance Bill expands the exempt items to include the following:
a. Brown and white bread;
b. Cereals including maize, rice, wheat, millet, barley, and sorghum;
c. Fish of all kinds;
d. Flour and starch meals;
e. Fruits, nuts, pulses and vegetables of various kinds;
f. Roots such as yam, cocoyam, sweet and Irish potatoes;
g. Meat and poultry products including eggs;
i. Salt and herbs of various kinds; and
j. Natural water and table water.
The bill also exempts MSMEs from VAT registration, pegging it below N25 million in turnover per year. The government said this will allow revenue authorities to focus their compliance efforts on larger businesses.