The Federal Government on Wednesday said it has retained 5 percent Value Added Tax (VAT) for contracts awarded before February 1, 2020.
Addressing State House reporters after the Federal Executive Council meeting today, the Senior Special Assistant to the President on Media and Publicity, Malam Garba Shehu, said the report of a Cabinet Committee on the effective date for the commencement of the 7.5% VAT on government contracts has been approved.
Shehu said the council had given approval that new contracts signed from February 1, 2020, going forward would attract 7.5% VAT, while those contracts earlier signed on 5% VAT before February 1 would remain at 5%.
“By law, the new VAT came into effect on the 1st of February, 2020. Government had worried about the implications of this on contracts that had been issued earlier than this year.
“So, the contracts that are being handled by various ministries particularly Ministry of Work for instance are coming from many years back. So, should the VAT on those contracts be 7.5% or 5% as earlier signed on to?
“A final decision was reached today. This is that new contracts that are signed from February 1, going forward will attract 7.5% VAT. Contracts earlier than February 1 signed on 5% VAT will remain at 5%. So, there is no more confusion on this matter,” the Presidential spokesman said.
