Thursday, June 25 , 2020 / 09:25
AM / By Taiwo Oyedele via Twitter /
Header Image Credit: FIRS
The FIRS, yesterday issued
a public notice (reproduced below) indicating that the following items
stated in the VAT Modification Order are still subject to VAT:
for pharmaceutical products;
energy equipment; and
for baby diapers & sanitary towels.
It is instructive to note
that S.38 of the VAT law says 'the Minister may by order published in
the Gazette -
(a) amend the rate of tax
(b) amend, vary or modify
the list set out in the First Schedule to this Act (i.e. Goods & Services
The VAT Modification
Order issued by the Minister stated clearly that:
"the extended list of
items exempted from VAT in the First Schedule to the VAT Act is as specified in
the Schedule to this Order."
Taiwo Oyedele of PWC Tax
Practice responded that, given the clear and unambiguous provisions of the VAT
Act and the VAT Modification Order, "any contrary position expressed by the
FIRS below cannot stand".
The FIRS Public Notice
- The Value Added Tax (Modification Order 2020): Items Not Exempted from
The Service received
several enquiries from taxpayers requesting to know whether or not some items
are exempt from VAT in view of their inclusion in paragraph 2 of Value Added
Tax (VAT) (Modification) Order 2020.
The Service hereby
clarifies as follows:
- The main objective of the VAT Modification Order was to provide
clear definition of each item listed in the First Schedule to the VAT Act
through an extended list of the items so exempted.
- Paragraph 2 of the Modification Order provides breakdown (including
the Common External Tariff (CET) Code) of items exempted from VAT under
the VAT Act. The breakdown is to guide importers, other stakeholders and
the Nigerian Customs Service (NCS) on the items to which VAT would not be
charged at the ports.
- The following items included in the breakdown are not exempt from
VAT as they were not listed in schedule 1 to the VAT Act or in a previous
Ministerial Order: (a) Natural gas (b) essential raw materials for the
production of pharmaceutical products (c) renewable energy equipment (d)
raw materials for the production of baby diapers and sanitary towels.
These items shall continue to be liable to VAT at 7.5% until otherwise
provided in an appropriate statutory instrument.
taxpayers, tax practitioners, tax officials, other stakeholders and the general
public should be guided accordingly.
See published notice below.
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