Accountant-General wrong, new VAT rate commences February 1 – Minister

The Minister of Finance, Budget and National Planning, Zainab
Ahmed, on Thursday, contradicted the Accountant General of the
Federation, Ahmed Idris, on the effective date for the
implementation of the new 7.5 per cent rate for the Value Added Tax
(VAT) in the country.

On Monday, President Muhammadu Buhari gave assent to the
newly-introduced Finance Act 2019, which, among others, reviewed
the VAT rate from 5 to 7.5 per cent.

At the presentation of the draft Finance Bill to the National
Assembly on October 14, 2019 for approval, indications were that
the implementation of the new VAT would be effective January 1,
2020.

However, at a media briefing in Abuja on Wednesday, the
accountant-general told journalists in his office that the new VAT
rate took off immediately the president signed the bill into law,
on Monday.

“On Monday, the President signed the Finance Bill into law. And
just yesterday (Tuesday), I saw a payment, which was prepared in
December last year. When I checked the payment was on the VAT rate
of 5 per cent. I said no.

“If I am to finalize the payment now, then the VAT rate must be
7.5 per cent. I stopped the payment and asked them to go and
recharge the new VAT rate of 7.5 per cent. The payment for 5 per
cent VAT has now been overtaken by events.

“That is that person’s luck. The law has to be obeyed.
Otherwise, I can be queried for disobeying the law,” the
accountant-general said.

Mr Idris insisted every payment that was not carried out for one
reason or another before the coming into effect of the Finance Act
will now suffer 7.5 per cent charge for VAT, because that is the
law, as at today (Tuesday).

But, speaking at the inauguration of the Board of the Federal
Inland Revenue Service (FIRS) on Thursday in Abuja, the minister
was emphatic on the take-off date for the new VAT rate.

“I want to announce that the effective date for the VAT increase
from 5 per cent to 7.5 per cent will be the first of February
2020,” the minister announced.

The minister had, on Wednesday, said she was going to make a
formal announcement of the effective date for the implementation of
the new VAT rate in ‘a few days’ time’.

While announcing February 1 as the official commencement date,
Mrs Ahmed explained this would only take effect after all the
necessary administrative procedures have been completed.

The administrative procedures include the formal gazette of the
Finance Act by the Federal Ministry of Justice.

“Once a bill is signed into law, it takes effect immediately.
But, it is to note that there are certain administrative procedures
and formalities to be finalised before commencement,” she said.

The minister urged the new FIRS board to be steadfast in
delivering its mandate to meet the non-oil revenue target, to
support government’s development.

She disclosed that the Tax Appeal Tribunals have identified new
cases, with about 75 new tax appeals reported, with a disputed
value of N73.3 billion and $19.5 million.

In his speech, the new FIRS Chairman, Muhammad Nami, pledged to
mobilise members to pursue the target of increased revenue for the
government

“As tax administrators and custodians of the Nigerian Tax
System, we have a responsibility to the nation to implement all tax
policies and laws in a manner that would ensure optimal benefit to
the nation,” he said.

Mr Nami said the board has recognised the huge responsibility on
it shoulder, as all tiers of government rely on it to provide
adequate funds for their activities and development projects in the
face of dwindling oil revenues.

He stressed the commitment of the board to reposition the
service for better service anchored on four cardinal pillars.

These include rebuilding the FIRS institutional framework by
strengthening the capacity of departments and units to deliver on
their mandates on a long term and sustainable basis.

The other pillars include building a robust collaboration to
foster a unified service system and building taxpayer and
data-centric FIRS.

The board has 14 members and is chaired by Mr Nami.

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