The Federal Government has introduced a new bill aimed at exempting various essential products and services from Value Added Tax (VAT).
This part of the government’s initiative to alleviate the financial burden on Nigerians.
The proposed legislation, 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,” was dated October 4, 2024.
Included in the VAT exemption list are baby products and locally manufactured sanitary towels, pads, and tampons, making these items more accessible to the public.
The bill specified that the exemption will also cover military hardware, arms, ammunition, and uniforms supplied to the armed forces and security agencies.
Additionally, shared passenger road transport services will be exempt from VAT to help reduce transportation costs. In the agricultural sector, VAT relief will apply to the purchase, hire, or lease of equipment like tractors and ploughs used for agricultural purposes.
However, agricultural individuals must first pay the VAT and later request a refund from tax authorities.
The bill also addressed diplomatic and educational activities, exempting goods and services supplied to diplomatic missions and non-profit educational performances from VAT.
Other exempted items include government licenses, land or buildings, and financial instruments, with supplies consumed in export processing or free trade zones also excluded from VAT for approved activities.
It is important to note that VAT will only be levied on these exempted items if the Minister publishes an order in the Official Gazette specifying a date for the tax’s reimposition.
This provision allows the government to adjust these exemptions as necessary in the future.
The items proposed for exemption from Value Added Tax (VAT) in the Federal Government’s new bill include:
1. Baby products
2. Locally manufactured sanitary towels
3. Pads
4. Tampons
5. Military hardware
6. Arms
7. Ammunition
8. Locally manufactured uniforms supplied to armed forces and paramilitary agencies
9. Shared passenger road transport services
10. Equipment for agricultural purposes (e.g., tractors, ploughs)
11. Goods or services supplied to diplomatic missions and diplomats (for non-profit activities)
12. Plays and performances conducted by educational institutions
13. Government licenses
14. Land or buildings
15. Financial instruments (money or securities, including interests in these instruments)
16. Supplies consumed within export processing or free trade zones for approved activities.