The Nigerian government has signed the 2019 Finance Bill into law, raising the VAT rate from 5% to 7.5%. The bill has also extended the list of goods and services exempted from VAT, including basic food items, microfinance, education and locally manufactured female sanitary products.
The full list of basic food 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, roots, salt, vegetables, water (natural water and table water).
It also includes locally manufactured sanitary towels, pads or tampons. And “services rendered by microfinance banks, tuition fees relating to nursery, primary, secondary and tertiary education.”
The Nigerian government is keen to stress that its VAT rate, at 7.5%, remains one of the lowest in Africa. Under Nigeria’s revenue sharing formula, 85% of VAT revenues goes to state and local government treasuries. The new Finance Act exempts Businesses with turnover below N25m ($69,000) from VAT payments.
The new Act also makes provisions for Customs and Excise Tariff. It stipulates that to reduce unfair advantages previously conferred on imported goods at the expense of locally manufactured ones, certain imported goods are now subject to excise duties similar to locally manufactured goods.
