Locally manufactured sanitary pads, bread, fish and others have been listed as everyday items exempted from the new 7.5 per cent Value Added Tax (VAT).
The Presidency listed the items in a detailed breakdown on Sunday released by the spokesman of Vice President Yemi Osinbajo, Laolu Akande.
The new VAT system is included in the Finance Bill signed into law on January 13.
The Act raises VAT from 5 per cent to 7.5 per cent.
The Presidency said it released the details to allay fears that low-income persons and companies would be marginalised by the new law.
The additional exemptions include the following: “Basic food items – additives (honey), bread, cereals, cooking oils, culinary herbs, fish, flour and starch, fruits (fresh or dried), live or raw meat and poultry, milk, nuts, pulses, roots, salt, vegetables, water (natural water and table water). Locally manufactured sanitary towels, pads or tampons.
“Services rendered by microfinance banks; tuition relating to nursery, primary, secondary and tertiary education.”
It said the bulk of additional VAT revenues accruing from the increase would go towards enabling states and local governments meet their obligations to citizens, including the new minimum wage as already noted by state governors.
The new Finance Act exempts businesses with turnover below N25 million from VAT payments.
Companies Income Tax (CIT) — under the new law small companies – companies with less than N25 million in annual turnover are charged Zero CIT.
It said: “CIT for Companies with revenues between N25 and N100 million (described in the Act as ‘medium-sized’ companies) has been reduced from 30 per cent to 20 per cent.
“Large companies with annual turnover greater than N100 million will continue to pay the standard 30 per cent CIT.
“The new Act includes a provision that grants to all companies engaged in agricultural production in Nigeria, an initial tax-free period of five years renewable for an additional three years.
“The new Act also provides incentives to promote tax compliance through bonus reductions in CIT for early remittance:
“Two per cent bonus for medium-size companies; one per cent bonus for other companies.”
On Personal Income Tax, the new Act now includes electronic mail as an acceptable form of correspondence for persons disputing assessments by the Tax Authorities.
Contributions to Pension and Retirement Funds, Societies and Schemes are now unconditionally tax-deductible.
Stamp Duty Tax — with the new Act, the N50 Stamp duty charge is now applicable only to transactions amounting to N10,000 and above, a significant increase on the former threshold of N1,000.
The new Act expands the list of items exempted from stamp duty.
The new Act also makes provisions for Customs and Excise Tariff.
It stipulates that to reduce unfair advantages previously conferred on imported goods at the expense of locally manufactured ones, certain imported goods are now subject to excise duties similar to locally manufactured goods.
