The new Value added Tax (VAT) rate of 7.5 per cent will not take effect until the new Finance Bill is gazetted by the Federal Government.
President.Chartered Institute of Taxation of Nigeria (CITN), Dame Olajumoke Simplice, has said.
Gazetting of the Bill is what gives it the power of implementation.
The Bill had stipulated that the implementation date will be January 1, 2020, but it was only signed on January 13.
“For me, there are technical issues that have to be addressed before the VAT implementation begins.
First, there is need to determine the effective implementation date as no implementation will take place until the Bill is gazetted.
Secondly, the implementation date may be February 1, 2010. The law should not work in retrospect. Gazetting is what gives the Bill teeth,” she said.
7.5 per cent VAT kicks off ..things to note
(1) Despite the VAT raise, Nigeria’s VAT is still one of the lowest in the world.
(2) The last VAT review was 25 years ago.
(3) The country also has the lowest VAT rate in Economic Community of West African States (ECOWAS) sub-region.
(4) Ideally, VAT review should take place every five years.
(5) VAT is a tax on consumption and is only paid when you consume goods or pay for services.
(6) Nigeria’s decision to raise VAT is good for its trade relations with other countries.
(7) VAT is very easy to collect and should be utilised for the development of the economy.
(8) Government should be held accountable on what the funds from VAT are spent on.
(9) VAT funds should be judiciously used for developmental projects.
(10) The new VAT rate will increase prices of goods,
(11) VAT is unlikely to affect manufacturers because they will pass the increased prices of goods to consumers.
(12) Tax payers should form pressure groups to monitor tax revenue spending and ensure accountability on the part of government.
(13) The Financial Act is an amendment to seven extant fiscal laws, which are: the Petroleum Profit Tax Act, the Customs and Excise Tariff Act, the Company Income Tax Act, the Personal Income Tax Act, the Value Added Tax, the Stamp Duties Act and the Capital Gains Tax.
(14) President Buhari said the Act has five strategic objectives, in terms of achieving incremental, but necessary, changes to the 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 Revenue for Government.
The new law is expected to make more revenue available to finance key government projects in health, education and critical infrastructure.
(15) One of the features of the new law is that those who want to open or maintain accounts with banks will provide their Tax Identification Number (TIN)
(16) Talking about the Value Added Tax, only 15% to goes to the federal government, 50% goes to the state and 35% goes to the local government councils.