Business

VAT Direct Initiative Not For Traders Below N25m Turnover – Ononuga

Published

1 year ago

July 7, 2023

…As Tinubu signs executive order to ease tax burden

By Charles Ebi

The Director of Value Added Tax at Federal Inland Revenue Service, Lovette Ononuga said its VAT Direct Initiative would exempt traders in the informal sector with a turnover below N25 million.

Ononuga disclosed this on Thursday in a Channel Television interview monitored by AljazirahNigeria.

recall that the FIRS, in partnership with the Market Traders Association of Nigeria, recently launched the VDI to widen the Nation’s revenue net.

After the announcement, there were mixed reactions as some Nigerians claimed that the initiative would affect petty traders who are already battling the effect of fuel subsidy removal.

But Ononuga clarified that the tax would not affect pretty traders like tomato or pepper traders.

According to him, the VDI is meant to capture electronic, textile, gold and other similar traders with turnovers from N25 million and above.

“We are not doing it aside from the VAT Act; the Act stipulates who should pay VAT, what is VATable and what is not. The average trader whose turnover is below N25 million is not affected by the VDI. Also, those who trade in the VAT exempted goods are not expected to pay taxes with this initiative.

“The informal sector we are talking about are those with huge turnovers who should be paying VAT but are not doing so, people that sell things like electronics, textiles, gold and all that, not people selling tomatoes, pepper in the marketplace. We are not targeting ordinary traders selling foodstuff in the market,” she said

In a similar vein, President Bola Ahmed Tinubu has signed an executive order suspending the five percent excise tax on telecommunication services and other related matters.

President Bola Ahmed Tinubu has reversed some of the taxes imposed in the last-minute Fiscal Policy Measures (FPM) which was signed by former President Muhammadu Buhari. The taxes were stepped down in an Executive Order by the president on Thursday.

The taxes include the suspension of the controversial 5 per cent Excise Tax on Telecommunications services; the 10 per cent Green Tax by way of Excise Tax on Single Use Plastics and the suspension of Import Tax Adjustment levy on certain vehicles.

Buhari’s Finance Minister, Zainab Ahmed, had in a circular reference number, HMFBNP/MDAs/CIRCULAR/2023FP//04 and titled, ‘Approval For The Implementation Of The 2023 Fiscal Policy Measures And Tariff Amendments,’ introduced the tax which took effect June 1, 2023.

The FMP signed by Buhari introduced additional excise taxes ranging from 20 per cent to 100 per cent increase on previously approved rates for alcoholic beverages, tobacco, wines and spirits have been introduced effective from 1 June 2023.

These are above the 2022 FPM’s approved Roadmap for 2022-2024 in the form of new and higher ad-valorem excise duties and specific rates while the excise duty rate on non-alcoholic beverages was retained at of N10 per litre.

On the Green Taxes, the FG will charge by way of excise duty on Single Use Plastics (SUPs) like plastic containers, films and bags at the rate of 10 per cent.

There is also an Import Adjustment Tax (IAT) levy that was introduced on motor vehicles of 2000 cc to 3999 cc at 2 per cent.

For vehicles of 4000cc and above, the tax will be 4 per cent while vehicles below 2000cc, mass transit buses, electric vehicles, and locally manufactured vehicles are exempted.

The Special Adviser to the President on Special Duties, Communication and Strategy, Dele Alake told State House Correspondents that the executive order is in fulfilment of his pledge to put Nigerians at the centre of government policies and address business unfriendly fiscal policy measures and multiplicity of taxes.

He said the executive order and three others were presidential interventions to address key concerns of manufacturers and other stakeholders regarding some recent tax changes.

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Business

FAAC: FG, States, LGCc Share N 1,289 Trillion From a Gross Total Of N2.258 Trillion For Month of September

Published

1 day ago

October 17, 2024

The Gleamer

Joel Ajayi
The Federation Account Allocation Committee (FAAC), at its October 2024 meeting chaired by the Honourable Minister of Finance and Coordinating Minister of the Economy, Wale Edun, shared a total sum of N1.298 Trillion to the three tiers of government as Federation Allocation for the month of September, 2024 from a gross total of N2.298 Trillion.
From the stated amount inclusive of Gross Statutory Revenue, Value Added Tax (VAT), Electronic Money Transfer Levy (EMTL), Exchange Difference (ED and Augmentation of N150.000 billion, the Federal Government received N424.867 Billion, the States received N453.724 Billion, the Local Government Councils got N329.864Billion, while the Oil Producing States received N90.415 Billion as Derivation, (13% of Mineral Revenue).

The sum of N80.993 Billion was given for the cost of collection, while N878.946 Billion was allocated for Transfers Intervention and Refunds.

The Communique issued by the Federation Account Allocation Committee (FAAC) at the end of the meeting indicated that the Gross Revenue available from the Value Added Tax (VAT) for the month of September 2024, was N583.675 Billion as against N573.341 Billion distributed in the preceding month, resulting in a increase.

From that amount, the sum of N23.347 Billion was allocated for the cost of collection and the sum of N16.810 Billion given for Transfers, Intervention and Refunds.

The remaining sum of N543.518 Billion was distributed to the three tiers of government, of which the Federal Government got N81.258 Billion, the States received N271.759 Billion and Local Government Councils got N190.231 Billion.

Accordingly, the Gross Statutory Revenue of N1.043 Trillion received for the month was lower than the sum of N1.221 Trillion received in the previous month by N177.426 Billion. From the stated amount, the sum of N56.878 Billion was allocated for the cost of collection and a total sum of N862.136 Billion for Transfers, Intervention and Refunds.

The remaining balance of N124.718 Billion was distributed as follows to the three tiers of government: Federal Government got the sum of N43.037 Billion, States received N21.829 Billion, the sum of N16.829 Billion was allocated to LGCs and N43.021 Billion was given to Derivation Revenue (13% Mineral producing States).

Also, the sum of N19.213 Billion from Electronic Money Transfer Levy (EMTL) was distributed to the three (3) tiers of government as follows: the Federal Government received N2.767 Billion, States got N9.222 Billion, Local Government Councils received N6.456 Billion, while N0.768 Billion was allocated for Cost of Collection.

The Communique also disclosed the sum of N462.191 Billion from Exchange Difference, which was shared as follows: Federal Government received N218.515 Billion, States got N110.834 Billion, the sum of N85.448 Billion was allocated to Local Government Councils, N47.394 Billion was given for Derivation (13% of Mineral Revenue).

It further disclosed of the Augmentation of N150.000 Billion which was shared as follows:Federal Government received N70.020 Billion, the States got N40.080 Billion and the LGCs received N30.900 Billion.

Oil and Royalty, Excise Duty, Electronic Money Transfer (EMTL) and CET levies increased considerably. While Value Added Tax (VAT) and Import Duty increased marginally. Petroleum Profit Tax (PPT) and Company Income Tax (CIT) and others recorded significant decreases.

According to the Communique, the total revenue distributable for the current month of September 2024, was drawn from Statutory Revenue of N124.716 Billion, Value Added Tax (VAT) of N534.518 Billion, N18.445 Billion from Electronic Money Transfer Levy (EMTL), N462.191 Billion from Exchange Difference and Augmentation of N150.000 Billion, bringing the total distributable amount for the month to N1.298 Trillion.

The balance in the Excess Crude Account (ECA) as at October 2024 stands at $473.754.

In his opening remarks, the Honourable Minister of Finance and Coordinating Minister of the Economy, Mr Wale Edun, restated the President Bola Ahmed Tinubu-led Administration’s commitment to implementing policies, programmes and initiatives that will enhance revenue generation with a view to enhancing the overall well-being of Nigerians in line with contemporary realities.

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