This was disclosed by the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed on Thursday, during the inauguration of the Chairman and Board members of the Federal Inland Revenue Service (FIRS) in Abuja.
Mrs. Ahmed stated that the Finance Act had made provisions support Micro, Small and Medium Enterprises (MSMEs) and soften the effect of the VAT rate increase on companies in a bid to increase employment and boost the economy.
“I want to state that one of the key provisions in the finance act 2019 that have elicited a lot of interest is the increase in the VAT from 5% to 7.5%, and to remind us all, the finance bill has made copious provisions to improve the ease of doing business; so we have a category of companies that have turnover of 25% and below that will be paying no taxes at all, and also we have reduced tax rates for companies that have turnover from 25 million to 100 million from 30% to 30%.
“The essence of this is to encourage formalization of businesses from the informal sector and also to encourage businesses to grow and become more productive, thereby increasing employment and also meeting the commitment of Mr. President to remove 100 million Nigerians out of poverty over the next 10 years.
“The effective date for the VAT increase from 5-7.5% will be the 1st of February 2020,” she stated.
President Muhammadu Buhari last week, signed the 2020 Finance Bill into law after it had announced plans in September 2019, to review the VAT through consultations at various levels in the country.