President Muhammadu Buhari has exempted 20 basic food items and a host of other commodities from Value-Added Tax (VAT) payment, after signing the Finance Bill into law.
In a statement signed by Laolu Akande, the Senior Special Assistant to the President on Media & Publicity, Office of the Vice President, the changes in the law will help promote the growth of Micro, Small and Medium Enterprises, as well as enhance private sector’s participation to the economy.
The new law gave the exemption to include, “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).
“Locally manufactured sanitary towels, pads or tampons,” it added.
Under the finance act, VAT also increased from five percent to 7.5 percent.
The Federal Government stated, “To allay fears that low-income persons and companies would be marginalized by the new law, reduce the burden of taxation on vulnerable segments, and promote equitable taxation, the Finance Act 2019 had extended the list of goods and services exempted from VAT”
To reduce unfair advantages on imported goods at the expense of locally manufactured ones, the law subjected some imported goods to excise duties similar to locally produced goods.
It further stipulated a provision to all companies in Nigeria “engaged in agricultural production, an initial tax-free period of five years”. This, according to the statement, is renewable for an additional three years.
As revealed by the Government, the Finance Bill will support the funding and implementation of the 2020 Budget. “We shall sustain this tradition by ensuring that subsequent budgets are also accompanied by a Finance Bill.”