About nigeria new vat

You're referring to the Value Added Tax (VAT) in Nigeria!

As of January 1, 2020, the Nigerian government introduced a new VAT rate of 7.5% to replace the previous 5% rate. This change was announced in the 2020 Finance Act, which aimed to increase government revenue and reduce the country's reliance on oil exports.

Here are some key points about the new VAT in Nigeria:

  1. Rate increase: The VAT rate was increased from 5% to 7.5% to generate more revenue for the government.
  2. Exemptions: Certain goods and services are exempt from VAT, including:
    • Basic food items like rice, bread, and milk
    • Medicines and medical equipment
    • Educational materials and services
    • Agricultural products
    • Exported goods and services
  3. Zero-rated goods and services: Some goods and services are zero-rated, meaning they are subject to a 0% VAT rate. These include:
    • Exported goods and services
    • International air and sea transportation
    • Certain financial services
  4. VAT registration: Businesses with an annual turnover of N25 million (approximately $67,000) or more are required to register for VAT.
  5. VAT payment: VAT is typically paid by the supplier of goods and services, but in some cases, the buyer may be required to pay VAT directly to the government.
  6. VAT refund: Businesses that are registered for VAT and have paid VAT on their inputs (purchases) can claim a refund from the government if they have not used the inputs in their business.
  7. Impact on businesses: The new VAT rate is expected to increase the cost of goods and services for consumers, which may lead to higher prices. Businesses may also need to adjust their pricing strategies and accounting systems to comply with the new VAT regime.

It's worth noting that the implementation of the new VAT rate has been met with some controversy, with concerns about the potential impact on small businesses and the poor. However, the government has argued that the increased revenue generated from VAT will help to fund important public services and infrastructure projects.