Nigeria's New VAT Regime

Introduction

Nigeria introduced Value Added Tax (VAT) into its tax system in 1993, with a modest VAT rate of 5%. By virtue of amendments made by the Finance Act 2019, the current VAT rate for Nigeria is now 7.5%. In addition to the revised VAT rate, there are other notable amendments to the VAT Act which include the exemption of small businesses from VAT registration and filing, as well as the expansion of the VAT exemption list. We consider the implication of these changes and more

Impact and Implementation of the new VAT Rate

While government hopes to generate more revenue from the revised VAT rate, there has been an inflationary impact on the prices of taxable goods and services. Regarding implementation, although the Finance Act has a commencement date of 13^th January, 2020, the Minister for Finance, Budget and National Planning announced 1^st February, 2020 as the commencement date for the implementation of the VAT rate of 7.5%. Effectively, from the 1^st of