Coast clear for VAT hike to 7.5 per cent

[Edoman]

Coast clear for VAT hike to 7.5 per cent
• House concurs with Senate on Finance Bill


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With Thursday’s passage of the Finance Bill by the House of Representatives, the stage is set for the take-off of a new Value Added Tax (VAT) regime.

The Senate last week passed the Finance Bill which will now be signed by President Muhammadu Buhari along with the Budget 2020 Bill to pave the way for the 7.5% VAT, up from five per cent.

The Finance bill which is an Executive bill seeks to amend the company income tax act, value added tax act, Customs and Excise act, personal income tax act, capital gains act, stamp duty act and the petroleum profit tax act.

Presenting the report of the Finance committee on the floor of the house, Chairman of the House Committee on Finance, Hon. James Abiodun Faleke (APC, Lagos) said the executive bill seeks to facilitate the ease of doing business in the country.

Faleke said the law also seeks to eliminate double taxation which is currently the practice in the country while establishing a threshold of N10,000 for stamp duty.

He said that what this meant was that only services of up to N10,000 and above will attract stamp duty which will not be collected by the Federal Inland Revenue Service.

He said that the decision to cede the power to the FIRS is because it is the only agency of government legally established to collect tax on behalf of the government, adding that this does not in any way affect the stamps being sold by NIPOST.

He said further that the bill also provide for tax relief on penalties, adding that it does not mean that when a company is fined, they now use it as a bass for tax report as it is being done right now.

Hon. Faleke said the decision to increase VAT from 5 percent to 7.5 percent is to make more money available to the states and local government to fund their activities, adding that the states and local government will be entitled to 85 percent of VAT proceeds.

He said further that with the passage of the finance bill, only good being manufactured in Nigeria, but being imported will now attract excise duties, adding that Nigerians are also expected to pay tax on gains made from legal transactions.

He said “if you buy a car and sell it, you will be expected to pay tax on the gain you make from that sale, adding that five year tax holiday for those involved in agricultural production has now been extended to ten years.

He informed the House that the success of the 2020 budget depend on the passage of the finance bill.