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FG unfolds plan to hike VAT, tax luxury items

By News Express on 24/01/2019

Views: 488

• Acting Finance Minister of Finance Zainab Ahmed
• Acting Finance Minister of Finance Zainab Ahmed

Nigeria has resolved to increase the Value Added Tax (VAT) on some luxury items and carbonated drinks during the year.

The Minister of Finance, Mrs Zainab Ahmed, revealed at the launch of the Strategic Revenue Growth Initiative in Abuja, that the move was aimed at improving revenue sources for government.

Ahmed said the move had become imperative due to the fiscal challenges the government was confronted with in providing infrastructure for its people.

VAT is a consumption tax placed on a product whenever value is added at each stage of the supply chain, from production to the point of sale.

She, however, noted that the increment will only be done after due consultation with the National Assembly.

“There will be a VAT increase. During the course of 2019, we will have clarity as to which items and what the rate will be and we will have to take a request to the National Assembly for amendment before it takes effect.

“There is also going to be luxury tax.

“Already, there is luxury tax imposed on things like jets, yachts and few exceptional items that are classified as luxury and the Chairman FIRS will speak to that but we are contemplating increasing excise duties on carbonated drinks just like we have excise duties now on Tobacco and alcohol.

“But this is going to be a subject of study because we have to identify which ones will be affected and the best way in which to apply the taxes”.

VAT yields high revenue to the government yearly.

The National Bureau of Statistics (NBS) reported that VAT from sectoral distribution from first to third quarters of 2018 was N808 billion.

Sectoral Distribution of Value Added Tax for Q2 and Q3, 2018 posted on the bureau’s website, showed an increase in the revenue generated from VAT in during the year under review.

The report showed that the sum of N273.50 billion was generated as VAT in the third quarter, N266.73 billion in the second quarter and 269.79 billion in first quarter of the year respectively.

The figures represented an increase of 2.54 per cent quarter-on-quarter, and 9.16 per cent increase year-on-year.

The report showed that the manufacturing sector generated the highest amount of VAT with N31.48 billion generated.

This, it said was closely followed by Professional Services and Commercial and Trading, both generating N25.57 billion and N15.99 billion respectively.

It further stated that the mining sector generated the least, and was closely followed by Pharmaceutical, Soaps and Toiletries and Textile and Automobiles and Assemblies with N52.70 million, N177.34 million and N265.35 million respectively.

In addition, it stated that out of the total amount generated in the third quarter of the year under review, N128.62 billion was generated as Non-Import VAT locally, while N58.84 billion was generated as Non-Import VAT for foreign.

The report, however, noted that the balance of N86.04 billion was generated as Nigeria-Customs import VAT in the year. (NAN)

Source News Express

Posted 24/01/2019 1:00:52 PM

 

 

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