Business News
FEC approves VAT increase of 7.5%, targets N7.5 trillion revenue
FEC approves VAT increase of 7.2%, targets N7.5 trillion revenue
The Federal Executive Council (FEC) has approved an increase in the Value Added Tax (VAT) to 7.5% from 5%.
The Minister of Budget and National Planning Zainab Ahmed disclosed this to state house correspondents at the end of the cabinet meeting on Wednesday.
The details: FEC meeting, which was presided over by President Muhammadu Buhari, directed immediate consultations with states, local governments and other relevant stakeholders before the new rate takes effect in 2020.
According to Ahmad, “We reported to the council and the council has agreed that we start the process towards the increase of the VAT rate. We are proposing and the council has agreed to increase the VAT rate from 5% to 7.5%.
“This is important because the federal government only retains 15% of the VAT — 85% is actually for the states and local governments and the states need additional revenue to be able to meet the obligations of the minimum wage.
“This process involves extensive consultations that need to be made across the country at various levels and also it will involve the review of the VAT act. So, it is not going to be implemented immediately until the act is reviewed.”
Speaking further, Ahmed stated that states need the revenue to be able to pay the new minimum wage.
“Following these assumptions, the total revenue estimate is the sum of N7.5 trillion for the year 2020.
“There will, of course, be the distribution to the three tiers of government based on the statutory revenue sharing formula as defined in the constitution and to this effect, it means the federal government will be receiving proposed aggregate of N4.26 trillion from the federal account and the VAT pool, while the states and the local governments are expected to receive N3.04 trillion and N2.27 trillion respectively.”
Recent Developments: Earlier in June, Mrs Ahmed stated that an upward review of VAT is a follow up on the agreement reached between the FG and labour union following the minimum wage increase. She stressed that such a marginal increase in VAT would enable the government to handle the incremental cost of increasing wages.
[READ: Zainab Ahmed explains why VAT will rise to 7.5% next year]
- Similarly, the Federal Inland Revenue Service (FIRS) has also announced that effective from January 2020, it will begin to impose VAT on online transactions, both domestic and international.
- The commencement date of the VAT charges on online transactions, according to Fowler, would be subject to the government’s approval.
What you should know: If approved by the federal lawmakers, the new VAT rate will take effect in 2020. In Nigeria, VAT replaced the sales tax in 1994 and was pegged at 5% by the military government of Sani Abacha.
In 2007, former president Olusegun Obasanjo increased VAT to 10% on the eve of his departure from office but it was reversed by his successor, Umaru Musa Yar’Adua, following opposition from the labour union.
In the meantime, despite wide criticisms that have greeted both the online VAT and the 7.5% VAT increase, the federal government considers this, as the most potent channels to meet the new minimum wage implementation.
Energy
FG approves new board for NLNG, BGT
The change was necessary because the current board members had been in office since 2005.
Federal Government has approved the newly reconstituted boards of Nigeria Liquified Natural Gas(NLNG) and Bonny Gas Transport Limited (BGT).
This was disclosed in a statement issued by the Minister of State for Petroleum Resources, Chief Timipre Sylva, in Abuja on Monday.
According to him, the new board, which was approved by President Muhammadu Buhari, was necessary because the current board members had been in office since 2005.
He disclosed that the new board members for the NLNG include Dr Edmund Daukoru as Chaiman, Mr Henry lkem-Obih as a Member and Dr Rabiu Sulaiman as a Member.
Other Members include the Group Managing Director of the Nigerian National Corporation (NNPC), Malam Mele Kyari and the Permanent Secretary, Ministry of Petroleum Resources, Mr Bitrus Nabasu.
He also said that Daukoru was also approved as the President of the Board of BGT while Doyin Akinyanju and Abdul Abba are members.
The minister noted that Kyari and Nabasu were also members of the board.
“I will like to use this opportunity to thank the chairman and other outgoing board members of NLNG for steering the companies to record successes, particularly the Train 7 FID.
“l wish the exiting members good health and more successes in their future endeavors.
“To the incoming members of the board, I congratulate you on this appointment; your selection is based on your experience, integrity and expertise.
“I, therefore,urge you to bring all these to bear in the discharge of your responsibilities in line with the progressive agenda of Mr President,” he said.
The News Agency of Nigeria(NAN) reports that some of the new board members had worked in the industry in the past.
Daukoru was a former Minister of State for Energy and also Secretary General of the Organisation of the Petroleum Exporting Countries in 2006.
He became the Amayanabo, or traditional ruler, of Nembe Kingdom in 2008.
Also, Ikem-Obih was a former Chief Operating Officer, Downstream of the NNPC and Rabiu a former Group Executive Director at the corporation.
Hospitality & Travel
Passengers can now arrive 90 minutes before departure for domestic flights – FG
The Federal Government has announced the reduction of arrival time for passengers from three hours to one hour and a half before departure for domestic flights.
This was disclosed in a tweet post by the Minister for Aviation, Hadi Sirika, through his Twitter handle on Monday, July 13, 2020.
The minister said that the decision was arrived at after they have reviewed passenger facilitation at the airport while noting that passengers should check-in online.
In the tweet post, Sirika said, ‘’My colleagues and I have reviewed passenger facilitation at our airports, consequently I am happy to announce that, henceforth travellers are to arrive one hour and half before their departure time for domestic flights. Travellers are advised to check-in online, please.’’
My colleagues & I have reviewed passenger facilitation at our airports, consequently I am happy to announce that, henceforth travelers are to arrive one hour and a half before their departure time for domestic flights. Travelers are advised to check in online, please 🙏🏽🇳🇬🇳🇬🇳🇬🙏🏽
— Hadi Sirika (@hadisirika) July 13, 2020
It can be recalled that the Federal Airports Authority of Nigeria (FAAN) had earlier in June issued flight resumption protocol for both international and local passengers across the country, advising passengers to arrive at the airport three hours before their time due to the new COVID-19 safety checks for domestic flight operations and five hours for international flight operations.
Economy & Politics
Seyi Makinde Proposes N3 billion investment plan for water supply
The local governments in Oyo are advised to submit a list of 10 faulty boreholes in the LG.
The Governor of Oyo State, Seyi Makinde announced the proposal of a N3 billion investment plan dedicated to water supply in rural and urban areas of the state.
Speaking through the Chairman of Rural Water Supply and Sanitation Agency (RUWASSA), Mr. Najeem Omirinde in Ibadan on Monday, he added that N500 million of the N3 billion would be used for repairing broken and faulty state-owned boreholes.
All Chairmen of each of the Local Governments in Oyo are advised to submit a list of 10 faulty boreholes in the Local governments.
The Oyo State governor also ordered that all new boreholes must be compliant with solar-powered pumps, to enable their longevity and save costs.
Urging residents to patronize the agency if they need to dig up boreholes for water, citing that it would be cheaper if done through the state agency than with private drilling companies.
Minister of Finance, Zainab Ahmed stated last year that Nigeria needs an estimated N36 trillion annually for the next 30 years to solve Nigeria’s infrastructure problem. The investment, although a tiny fraction of what Nigeria needs is a bold step by the Oyo State government.
FG approves new board for NLNG, BGT
Passengers can now arrive 90 minutes before departure for domestic flights – FG
Nigerian stock investors lose N55.17 billion, as Zenith, GTBank and MTN finish lower
Seyi Makinde Proposes N3 billion investment plan for water supply
Coronation Research releases report on the Nigerian Investment terrain
COVID-19 Update in Nigeria
Daily Parallel Market exchange rate – ₦462/$1
Best Mutual Funds in Nigeria
How to get creative sector loan from the CBN, Bankers Committee
$30 billion worth of BTCs disappears forever
Oluwarinumi
September 12, 2019 at 9:03 am
So increase in VAT rate is to pay minimum wage rate, what about the price increase of other items? For me, the Government is taking massively from the people to pay the people.