Why we exempted basic food items, tuition fees, others from VAT- FG

The federal government has explained why it decided to exempt tuition fees, basic food items and 18 other items from the 7.5 per cent Value Added Tax (VAT) implementation scheduled to commence by February 1,st 2020.

The list of exempted items includes 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, and roots. Others are salt, vegetables, water (natural water and table water), locally manufactured sanitary towels, pads or tampons services rendered by microfinance banks, and tuition fees relating to nursery-university.

In a statement issued by the Presidency through the Senior Special Assistant to the President on Media & Publicity, Garba Shehu, and his colleague from the Office of the Vice President, Laolu Akande, disclosed that the exemptions were made in a bid to keep cost of living from rising for Nigerians due to the changes in VAT.

“To allay fears that low-income persons and companies would be marginalised 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,” the statement said.

Meanwhile, the increase of VAT from 5 per cent to 7.5 percent is purposed to consolidate efforts already in place to create an enabling environment for improved private sector participation and contribution to the economy.

“The Finance Act 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 law,” it added.

Nigeria’s new VAT rate was said to be the lowest inAfrica and one of the lowest in the world. The Presidency argued that other African countries such as South Africa, Ghana, Kenya, Egypt, Rwanda, and Senegal post VAT rates between 12.5 per cent and 18 per cent.

In Nigeria, 85 per cent of the collected VAT would go to states and local governments.

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