Mrs. Zainab Ahmed, Hon. Minister for Finance, Budget and National Planning

VAT increase effective from February 1, says Government

Isola Moses

The Federal Government of Nigeria has said that the latest increase in Value Added Tax (VAT) from 5 to 7.5 percent will take effect from February 1, 2020.

Channels TV reports that Mrs. Zainab Ahmed, Honourable Minister for Finance, Budget and National Planning disclosed this Thursday, January 17, at the inauguration of the Chairman and Members of the Board of Federal Inland Revenue Service (FIRS), in Abuja.

Mrs. Ahmed, the source stated, said the Finance Act had made provisions to support Micro, Small and Medium Enterprises (MSMEs), and soften the effect of the VAT rate increase on companies.

This measure is being taken in a bid to increase employment and boost the economy, she said.

“I want to state that one of the key provisions in the Finance Act 2019 that have elicited much interest is the increase in the VAT from 5% to 7.5%.

To remind us all, the Finance Act has made copious provisions to improve the ease of doing business.

So, we have a category of companies that have turnover of 25% and below that will be paying no taxes at all, and also we have reduced tax rates for companies that have turnover from 25 million to 100 million from 30% to 30%,” Ahmed said.

According to her, the essence of this is to encourage formalisation of businesses from the informal sector and also to encourage businesses to grow and become more productive.

With this measure, Nigeria then, can increase employment, and also meet the commitment of Mr. President to remove 100 million Nigerians out of poverty over the next 10 years, she noted.

“The effective date for the VAT increase from 5% to 7.5% will be 1st February, 2020,” she stated.

President Muhammadu Buhari last week, signed the 2020 Finance Act into law after it had announced plans in September 2019 to review the VAT through consultations at various levels in the country.

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