As part of its measures to ease the financial burden on Nigerians, the Federal Government has introduced a new bill seeking to exempt a range of essential products and services from Value Added Tax (VAT).
The bill, covering both the economic and social sectors, is titled “A Bill for an Act to Repeal Certain Acts on Taxation and Consolidate the Legal Frameworks relating to Taxation and Enact the Nigeria Tax Act to Provide for Taxation of Income, Transactions, and Instruments, and Related Matters.”
It was sighted by New Daily Prime on Saturday.
The government said its sole essence is to make the listed items in the VAT exemption bill more accessible to a wide range of Nigerians.
The items on the VAT exemption include baby products, locally manufactured sanitary towels, pads, and tampons.
However, the bill extends exemptions to both economic and social sectors.
According to the bill, other items exempted from VAT are military hardware, arms, ammunition, and locally manufactured uniforms supplied to the armed forces, paramilitary, and other security agencies.
Apparently, to mitigate transportation costs for the public, the bill exempts shared passenger road transport services from VAT.
Also in the agricultural sector, the bill provides VAT relief for the purchase, hire, or lease of equipment such as tractors and ploughs, as long as they are used for agricultural purposes.
However, people and businesses engaged in agriculture are required to first pay the VAT and subsequently request a refund from the relevant tax authorities.
Diplomatic and educational activities also receive consideration in the proposed law.
Goods or services supplied to diplomatic missions, diplomats, and entities operating under the Diplomatic Immunities and Privileges Act are listed as exempt, provided the activities are not for profit. Similarly, plays and performances conducted by educational institutions as part of the learning process are included in the VAT exemption.
Some other items highlighted for exemption are government licenses, land or buildings, and financial instruments such as money or securities, including interests in these instruments.
The bill notes that supplies consumed within export processing or free trade zones will not attract VAT, provided they are used for approved activities.
The bill emphasizes that VAT will only be collected on these items if the Minister, by an order published in the Official Gazette, specifies a date for the imposition of VAT on any exempted items.
In essence, this provision suggests that while the exemption will initially be in place, the government retains the flexibility to modify these rules as needed in the future.
