President Muhammadu Buhari has presented a finance bill to the National Assembly for a change in Nigeria’s Fiscal Laws.
He disclosed this while presenting the 2020 budget to the joint sitting of the National Assembly on Tuesday.
“Accompanying the 2020 Budget Proposal is a Finance Bill for your kind consideration and passage into law.
“This Finance Bill has five strategic objectives, in terms of achieving incremental, but necessary, changes to our fiscal laws,” he said.
According to him, the objectives of the Financial Bill was Ppromoting fiscal equity by mitigating instances of regressive taxation, reforming domestic tax laws to align with global best practices, introducing tax incentives for investments in infrastructure and capital markets, supporting Micro, Small and Medium-sized businesses in line with our Ease of Doing Business Reforms; and raising revenues for government.
“The draft Finance Bill proposes an increase of the VAT rate from 5% to 7.5%. As such, the 2020 Appropriation Bill is based on this new VAT rate. The additional revenues will be used to fund health, education and infrastructure programmes.
“As the States and Local Governments are allocated 85% of all VAT revenues, we expect to see greater quality and efficiency in their spending in these areas as well,” he said.
The president however noted that the VAT Act has already exempted pharmaceuticals, educational items, and basic commodities.
He added that the exemptions are being expanded under the Finance Bill, 2019.
“Specifically, Section 46 of the Finance Bill, 2019 expands the exempt items to include, Brown and white bread, Cereals including maize, rice, wheat, millet, barley and sorghum,” he said.
Other items include, Fish of all kinds, Flour and starch meals, Fruits, nuts, pulses and vegetables of various kinds, Roots such as yam, cocoyam, sweet and Irish potatoes, Meat and poultry products including eggs, milk, salt and herbs of various kinds as well as natural water and table water.
“Additionally, our proposals also raise the threshold for VAT registration to N25million in turnover per annum, such that the revenue authorities can focus their compliance efforts on larger businesses thereby bringing relief for our Micro, Small and Medium-sized businesses.
“It is absolutely essential to intensify our revenue generation efforts. That said, this administration remains committed to ensuring that the inconvenience associated with any fiscal policy adjustments, is moderated, such that the poor and the vulnerable, who are most at risk, do not bear the brunt of these reforms,” he added.
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