The Executive Chairman, Federal Inland Revenue Service (FIRS), Mr. Tunde Fowler, has stated that Value Added Tax (VAT) is primarily designed to support poor Nigerians and not to create hardship for them, as it is charged on consumption and capacity to consume.
The FIRS boss made the clarification in Lagos at the weekend at the maiden edition of the Nigeria Tax Outlook (NTO) Stakeholders Roundtable Series organised by Nigeria Taxpayer Hub.
He noted that the revenue generated from VAT is channeled towards assisting the poor by providing basic amenities.
“When you don’t consume certain categories of goods and services, you are not liable to pay VAT charges on those items.
VAT is not charged on all medical and pharmaceutical products. It is not charged on basic food items. It is not charged on books and educational materials.
It is not charged on baby products, fertilizers, locally produced agricultural and veterinary medicine. VAT is not charged on farming machinery and farming transportation equipment,” he explained.
He equally explained that VAT is not charged on all exports, plant machinery and goods imported for use in Export Processing Zones and free trade zones, provided that 100 percent production of such company is for export.
According to the FIRS boss, other services exempted from VAT are medical services, services rendered by community banks, mortgage Institutions, plays and performances conducted by educational institutions as part of learning and all exported services are exempted from VAT.
Fowler also clarified what he told the Senate Committee on Finance last week, saying what he called for was an increase in the number of Nigerians and companies paying VAT and not a 50 per cent increase in VAT rate.
He also called for a reduction in Companies Income Tax (CIT) rate for small businesses so as to improve compliance.
“Some people got it a bit wrong. Let me clarify some things. I understand that some people misunderstand what the VAT is.
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“VAT is a consumption tax. If you don’t have money to purchase certain categories of goods and services and you don’t consume them, then VAT is not your problem. VAT is used to assist the needy.
“VAT provides support for the needy, not a hardship on them. Eighty-five per cent of VAT collected is shared among states for them to provide free education, free health services, provide basic amenities among others,” he stated.
He added that if countries like United Arab Emirates (UAE), Saudi Arabia, which are rich in oil resources would be laying emphasis on taxation, Nigeria should also emulate them.
At the event, experts in tax practice, administration and tax consultants from KPMG, Pedabo, Deloitte, Ascension, PwC, Anderson Tax, Lagos State Internal Revenue Service (LIRS), Drudge among others pointed ways forward for tax practice in Nigeria.
12 Comments
Knowledge is power this article is really educative. I wish we can go extra miles to educate the masses on issue like this so they don’t get mis lead plus it will go along way to reduce crisis.
Poor Nigerians shouldn’t worry about VAT….from this analysis,it’s very clear that the introduction of VAT is to help the poor through the state government…..With time our country will be at the top….God bless Nigeria
This is government that is care to explain in details to it’s citizens.
From the explanations above above, we shall smile in the end.
Next level is already confirmed. Kudos to this government
Next level things. Government of the people
Is levied on the difference between the purchase cost of an asset and the price at which it can be sold (i.e., the amount of value added to it). Producers and distributors typically pass the cost of the VAT on to the final consumer in the form of price increases. Tax is added to a product’s price each time it changes hands until delivery to the customer takes place, when the final tax is paid. As a good citizen you have to pay your tax for the growth of this country.
This is the government of the people
VAT should be a responsibility of all the good citizens to adopt without any complain.Thanks to this Buhari/Osinbajo administration.
Nigeria is already working with the govt policies for the poor and not the elites alone… #Nextlevelconfirmed.
I think Nigerians should get information clear before commenting, as this government does not take interest in bringing hardship on the citizens. It is not increase in VAT but an increase in VAT payers
This to me is a sure way of diversifying our economy. Other countries especially our west African neighbors have more VAT rates than we have and they are doing credibly fine. A good example is a country like Ghana. We can’t afford to stay aloof off the realities of today. We must the reality and attack it head long. Slight hike in VAT rate is a sure way to go.
This is a working government