Buhari based 2020 budget on proposed VAT rate
Nigeria’s President Muhammadu Buhari has based the 2020 budget funding of education, health and infrastructure on the proposed increase of Value Added Tax from 5% to 7.5%.
“The 2020 appropriation being presented today is predicated in the following parameters: Benchmark Oil Price $57 Production: 2.18m bpd FX: N305/$ Proposed increase of VAT from 5% to 7.5%,” Buhari said while presenting the 2020 budget to the National Assembly
“The proposed increase in VAT from 5% to 7.5% will be used to fund education, health & infrastructure.”
The proposed increase of VAT rate from 5 to 7.5 per cent by the federal government is still subject to review and approval of the National Assembly.
Following the announcement of the plan to increase VAT, many critics, condemned the plan saying it is at the disadvantage of the masses.
But the Minister of Finance, Budget and National Planning, Zainab Ahmed, said the proposed increase on VAT was based on the recommendation of the presidential technical advisory committee.
The federal government on January 9 constituted a committee chaired by an Economist and Managing Director/ Chief Executive Officer of Financial Derivatives Company Limited, Bismack Rewane.
The committee was mandated to give advice on ways to realise alternative sources of raising funds for the implementation of the new minimum wage by the government.
The committee submitted its report on March 21 with the increase in the VAT rate from 5 per cent to 7.5 per cent as one of its key recommendations to government to handle the issue.
The president, however, said the threshold for VAT registration will be raised to N25m turnover per annum, to bring relief to small businesses.
He said the the proposed increased VAT will exempt Pharmaceuticals, Educational items and basic commodities.