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Business News

Firms with N25m turnover and above to pay new VAT rate – DG, Budget Office

Ben Akabueze, DG of federal budget office has said the proposed 7.5% VAT by FG will apply to businesses recording a high turnover of N25m and above.

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Ben Akabueze

Ben Akabueze, Director General of Nigeria’s federal budget office has said the proposed 7.5% Value Added Tax (VAT) by the Federal Government will apply to businesses recording a high turnover of N25 million and above.’

Akabueze said this at the close of the 25th Nigerian Economic Summit in Abuja while adding President Buhari exempted some critical consumables from the VAT hike in finance bill that will be presented to the National Assembly today.

The Details: Ben said that the increment of VAT in Nigeria has been already settled and it is imperative to improve taxation levied on consumption.

The question of increasing the VAT rate in Nigeria is a matter that has been long settled in past summits about the necessity to increase and improve taxation through consumption taxes.

Indeed, about 9 years ago that was supposed to have happened, two things were supposed to happen simultaneously were VAT increase from 5 to 10 percent and a reduction in personal income tax rate,” he said.

[READ MORE: Finance Minister, Zainab Ahmed says Nigeria’s VAT collection rate is low]

VAT Explained: He explained that VAT is consumption tax and several Nigerians hardly engage in any activity where VAT can be charged.

One important thing to know is that VAT is a consumption tax, and the truth is the generality of the poor and vulnerable Nigerians have very minimal engagement with VAT, because they hardly consume or engage with the paltform where VAT is chargeable.”

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Ben Akabueze, Nigeria budget shortfall

We expanded that to try and cover as much of the things that the poor consumes.” Akabueze said.

Akabueze added that the existing VAT law still has no threshold for applicability.

This means even the woman on the road side is supposed to be charged VAT, but this new act has established a trench hold which says it shall be applied to only businesses with a turnover of over N25 million and above, so small businesses are exempted.” Akabueze explained.

Recent Developments: Earlier in June, Zainab Ahmed stated that an upward review of VAT was a follow up on the agreement reached between the Federal Government and Labour Unions 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.

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[READ MORE: Buhari announces 2020 budget based on proposed 7.5% VAT increase]

Similarly, the Federal Inland Revenue Service (FIRS) has announced that effective from January 2020, it would 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.

Reincarnated as a lover of stocks, Angel investors, seed funds, and anything aligned to tech or startups raising money, Joseph's work at Nairametrics involves following the money to wherever it leads. Before joining Nairametrics, he won an investigative journalism fellowship with ICIR, appeared in several national dallies, with hard-hitting opinions, features and investigative pieces. He has also engaged in content marketing and copywriting for a top e-commerce firm in Nigeria.

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Business

FG explains why Lagos-Ibadan rail line was not linked to the sea

The government in its explanation said that the delay was due to disruption by trucks going in and out of the port complex.

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FG needs $656 million to complete Lagos-Ibadan railway project – Amaechi, Nigeria loses N150 billion annually to shipping tariffs, Ibadan to Kano rail construction

The Federal Government has stated why the China Civil Engineering Construction Company (CCECC) Nigeria Limited could not link the final part of the Lagos-Ibadan rail line to the sea.

The government in its explanation said that it was due to disruption by trucks going in and out of the port complex.

According to a press statement signed by the Director, Press and Public Relations of the Federal Ministry of Transportation, Eric Ojiekwe, this disclosure was made by the Minister of Transportation, Rotimi Amaechi, while on a routine tour of the Lagos-Ibadan rail line project on Saturday, April 10, 2021.

The Minister pointed out that the original blueprint for the Lagos-Ibadan rail line project was not adhered to by CCECC Nigeria Limited and TEAM consortium and therefore warned that the master plan of the soon to commence Ibadan-Kano rail line project should not be changed.

The statement from the ministry partly reads, “The Nigerian Government has restated its commitment to connect the whole country by rail with the soon to commence Ibadan-Kano Standard Gauge Rail project.”

Amaechi forewarned that the master plan of the soon to commence project should not be changed as the original blueprint for the Lagos-Ibadan wasn’t adhered to by Messrs CCECC Nigeria and TEAM consortium. The Minister who rode the train from Ebute-Meta to the 8.72 km Apapa Port Spur line, informed the media that the inability of Messrs CCECC Nigeria to link the final part of the rail line down to the sea is rather due to disruption by trucks going in and out of the port complex.’’

The Minister had noted that the Federal Government has paid its share of the counterpart funding of the Ibadan-Kano rail line project and is waiting for China-Exim bank to ratify its side of the agreement for the project to commence.

He also advised the Nigerian Railway Corporation (NRC) to acquire more land around the train stations and the rail tracks for future development adding that this will be near impossible to do in the future as whatever space available now would have been taken over by businesses attracted to the rail line.

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In case you missed it

It can be recalled that full commercial train services commenced on the Lagos-Ibadan rail line after train operations commenced on December 7, 2020, with only Lagos, Ibadan and Abeokuta residents enjoying the train services.

This is because other minor and major stations along that route were yet to be completed.

 

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Manufacturing

Industrial Index loses -12.39 points, as BUA and Lafarge Cement shares top losers list

The NSE Industrials index lost 12.39 index points in the first trading week in the month of April.

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Manufacturing: Activity levels pick up albeit readings still below water

The Nigerian Stock Exchange Industrial Index at the close of trading activities for the first week in the month of April closed on a bearish note, following a 0.66% decrease in the shares of BUA CEMENT and Lafarge.

At the close of trading activities on the Nigerian Stock Exchange on the 9th of April 2021, the industrial index depreciated by 55.01 index points, to close lower at 1,928.18 index points for the week.

When compared to the overall performance of the market, the NSE Industrial index underperformed, noting that the NSE All-Share Index and Market Capitalization depreciated by 0.66% to close the week at 38,866.39 and N20.3350 trillion respectively.

READ: COVID-19, VAT, FX scarcity adversely impacted our operations in 2020 – Nigerian Breweries boss says

What you should know

The NSE Industrial Index was designed to provide an investable benchmark to capture the performance of the Industrial Sector. It comprises the most capitalized and liquid companies in the industrial sector and is based on the market capitalization methodology.

The index tracks the performance of ten industrial companies on the Nigerian Stock Exchange which includes Dangote, BUA, and Lafarge Cement.

The overall performance of the companies for the week was bearish, as the index closed on a negative note driven by the decrease in the share price of BUA Cement and Lafarge.

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MEYER (19.51) was the only gainer for the week, while BUACEMENT (-1.09%) and LAFARGE WAPCO (-3.00%) were the only losers for the week.

GAINER

  • MEYER up by19.51% to close at N0.49.

LOSER

  • WAPCO down by -3.00% to close at N21.00.
  • BUACEMENT down by -1.09% to close at N72.70.

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