- LCCI frets over impact on businesses, end users
resident Muhammadu Buhari has signed the 2020 Finance Bill into law.
With the signing of bill into law, the President has approved the increment of the Value Added Tax (VAT) rate from five per cent to 7.5%.
Special Adviser on Media and Publicity to the President, Mr. Femi Adesina, in a statement yesterday, confirmed the development.
“With the assent, there will be more revenue to finance key government projects, especially in the areas of health, education and critical infrastructure,” Adesina said.
The new law is targeted at reforming the Nigerian tax system to align with world best practices and supporting Micro, Small and Medium Enterprises through the ease of doing business initiative.
It is also expected to improve revenue for the
government as well as incentivise investments in infrastructure and capital markets.
President Buhari had, while presenting the 2020 Appropriation Bill to the National Assembly, also presented the Finance Bill.
Buhari had said: “This Finance Bill has five strategic objectives, in terms of achieving incremental, but necessary, changes to our fiscal laws.
“These objectives are; promoting fiscal equity by mitigating instances of regressive taxation; reforming domestic tax laws to align with global best practices; introducing tax incentives for investments in infrastructure and capital markets; supporting Micro, Small and Medium-sized businesses in line with our Ease of Doing Business Reforms; and raising revenues for government.
“The draft Finance Bill proposes an increase of the VAT rate from five per cent to 7.5%, as such, the 2020 Appropriation Bill is based on this new VAT rate,” he added.
Meanwhile, the Lagos Chamber of Commerce and Industry (LCCI) has expressed concern on the impact the Value Added Tax (VAT) increment would have on businesses and end users from the cost pressure perspective, due to the high cost in operating environment.
Yusuf also expressed concern over the provision on minimum tax, saying that it was inappropriate to compel loss-making firms to pay tax, no matter how little.
This, the Director-General explained, amounted to erosion of capital for such businesses.
He, however, commended the Federal Government on some of the expected positive impacts of the finance bill signed into law by President Buhari.
Its Director-General, Mr. Muda Yusuf made the commendation in a statement made available to newsmen yesterday in Lagos.
Yusuf said that a number of favourable provisions for small businesses were reflected in the finance bill, now signed into law.
He said that the impact on government revenue would be positive, especially for states and local governments, as their fiscal position would be enhanced.
His words: “The finance bill has a number of favourable provisions for small businesses and this is an aspect to commend. However, the VAT increment would impact adversely on businesses from cost pressures perspective.
“Margins would be affected, depending on the extent to which additional costs could be passed to consumers.
“We worry that we are operating in a high cost environment and also have the worry about the provision on minimum tax which we had argued against this provision.
“It is inappropriate to compel loss-making firms to pay tax, no matter how little. This amounts to erosion of capital,” he said.