New financial bill: Why 7.5 VAT Implementation will start from February 1st

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The new Value added Tax (VAT) rate of 7.5 per cent will not take effect until the new Finance Bill is gazetted by the Federal Government, President, Chartered Institute of Taxation of Nigeria (CITN), Dame Olajumoke Simplice has said.

In a chat with our sources on Monday, she said said gazetting of the Bills is what gives it the power for implementation.

She said the Bill had stipulated that the implementation date will be January 1, 2020, but the was only signed on January 13.

“For me, there are technical issues that have to be addressed before the VAT implementation begins. First, there is need to determine the effective implementation date as no implementation will take place until the Bill is gazetted. I think the implementation date may be February 1, 2010. The law should not work in retrospect. Gazetting is what give the Bill teeth,” she said.

Simplice disclosed that despite the VAT raise, Nigeria’s VAT is still one of the lowest in the world.

Read Also: 7.5% VAT kicks off as Buhari signs Finance Bill
According to her, the last VAT review was 25 years ago. She said the country also has the lowest VAT rate in Economic Community of West African States (ECOWAS) sub-region.

According to the CITN chief, VAT review should take place every five years.

“VAT is a tax on consumption and is only paid when you consume goods or pay for services. Nigeria’s decision to raise VAT is good for its trade relations with other countries. Besides, VAT is very easy to collect and should be utilised for the development of the economy,” she said.

Simplice said government should also be held accountable on what the funds from VAT are spent, adding that the funds should be judiciously used for developmental projects.

According to her, the new VAT rate will increase prices of goods, but is unlikely to affect manufacturers because they will pass the increased prices of goods to consumers.

Simplice advised tax payers to form pressure groups to monitor tax revenue spending and ensure accountability on the part of government.

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Godwin Okafor is a Financial Journalist, Internet Social Entrepreneur and Founder of Naija247news Media Limited. He has over 16 years experience in financial journalism. His experience cuts across traditional and digital media. He started his journalism career at Business Day, Nigeria and founded Naija247news Media in 2010. Godwin holds a Bachelors degree in Industrial Relations and Personnel Management from the Lagos State University, Ojo, Lagos. He is an alumni of Lagos Business School and a Fellow of the University of Pennsylvania (Wharton Seminar for Business Journalists). Over the years, he has won a number of journalism awards. Godwin is the chairman of Emmerich Resources Limited, the publisher of Naija247news.

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