FG begins implementation of Finance Act, 7.5% VAT on transactions

The federal government has commenced the immediate implementation of some aspects of the Finance Act with the implementation of 7.5 per cent Value Added Tax on government transactions.

Ahmed Idris, the accountant-general of the federation, confirmed the development during a chat with journalists on Wednesday in Abuja.

The move followed the signing of the Finance Bill into law, on Monday, by the President Muhammadu Buhari, after it was passed by the National Assembly on November 21, 2019.

The objectives of the Act are to strategically promote fiscal equity by mitigating instances of regressive taxation; reform domestic tax laws to align with global best practices, and introduce tax incentives for investments in infrastructure and capital markets.

It is also aimed at supporting small businesses in line with the ongoing ease of doing business reforms; and raise revenues for the government by various fiscal measures, including an increase in the rate of Value Added Tax from five per cent to 7.5 per cent.

The bill also seeks to provide efficiency in the administration of individual income taxes in Nigeria.

Idris said that already, the bill has become a law and it was imperative for his office to obey the law.

Specifically, the accountant-general said he had to stop the payment of a certain amount on Tuesday because the transaction was processed based on five per cent VAT.

According to him, payment for the transaction which occurred last year will not be made until the 7.5 per cent VAT is factored into the cost of transaction.