The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, has disclosed that Nigerians will no longer pay the previous 5% VAT on goods and services any longer as from February 1, 2020, but rather a 7.5% VAT on goods and service.
She disclosed that the 2.5% increase in the VAT was to help bridge the gap in the budget deficit of 2020 and that all necessary preparations as to the smooth take-off of the increase especially the gazette of the act by the federal ministry of justice had been completed.
In light of this also the presidency had signed the new finance bill into law which the Minister of finance. Budget and national planning had earlier revealed that it will empower small and medium scale enterprises whose annual turnover is below N25million not to pay the statutory company income tax (CIT).
VAT is an indirect tax that is levied on goods and service purchased by the consumers, it does not place any burden on the manufacturer but rather on the consumer of goods and services, meaning, in this case, the price of goods in the market will automatically increase by 2.5% so as to cover the increase that will be remitted to the tax officials as VAT at the end of the day.