As Tinubu signs executive order to ease tax burden

BY Charles Ebi

Lovette Ononuga, the director of Value Added Tax at Federal Inland Revenue Service, said its VAT Direct Initiative would exempt traders in the informal sector with a turnover below N25 million.

Ononuga disclosed this on Thursday in a Channel Television interview monitored by AljazirahNigeria.

recall that the FIRS, in partnership with the Market Traders Association of Nigeria, recently launched the VDI to widen the Nation’s revenue net.

After the announcement, there were mixed reactions as some Nigerians claimed that the initiative would affect petty traders who are already battling the effect of fuel subsidy removal.

But Ononuga clarified that the tax would not affect pretty traders like tomato or pepper traders.

According to him, the VDI is meant to capture electronic, textile, gold and other similar traders with turnovers from N25 million and above.

“We are not doing it aside from the VAT Act; the Act stipulates who should pay VAT, what is VATable and what is not. The average trader whose turnover is below N25 million is not affected by the VDI. Also, those who trade in the VAT exempted goods are not expected to pay taxes with this initiative.

“The informal sector we are talking about are those with huge turnovers who should be paying VAT but are not doing so, people that sell things like electronics, textiles, gold and all that, not people selling tomatoes, pepper in the marketplace. We are not targeting ordinary traders selling foodstuff in the market,” she said

In a similar vein, President Bola Ahmed Tinubu has signed an executive order suspending the five percent excise tax on telecommunication services and other related matters.

President Bola Ahmed Tinubu has reversed some of the taxes imposed in the last-minute Fiscal Policy Measures (FPM) which was signed by former President Muhammadu Buhari. The taxes were stepped down in an Executive Order by the president on Thursday.

The taxes include the suspension of the controversial 5 per cent Excise Tax on Telecommunications services; the 10 per cent Green Tax by way of Excise Tax on Single Use Plastics and the suspension of Import Tax Adjustment levy on certain vehicles.

Buhari’s Finance Minister, Zainab Ahmed, had in a circular reference number, HMFBNP/MDAs/CIRCULAR/2023FP//04 and titled, ‘Approval For The Implementation Of The 2023 Fiscal Policy Measures And Tariff Amendments,’ introduced the tax which took effect June 1, 2023.

The FMP signed by Buhari introduced additional excise taxes ranging from 20 per cent to 100 per cent increase on previously approved rates for alcoholic beverages, tobacco, wines and spirits have been introduced effective from 1 June 2023.

These are above the 2022 FPM’s approved Roadmap for 2022-2024 in the form of new and higher ad-valorem excise duties and specific rates while the excise duty rate on non-alcoholic beverages was retained at of N10 per litre.

On the Green Taxes, the FG will charge by way of excise duty on Single Use Plastics (SUPs) like plastic containers, films and bags at the rate of 10 per cent.

There is also an Import Adjustment Tax (IAT) levy that was introduced on motor vehicles of 2000 cc to 3999 cc at 2 per cent.

For vehicles of 4000cc and above, the tax will be 4 per cent while vehicles below 2000cc, mass transit buses, electric vehicles, and locally manufactured vehicles are exempted.

The Special Adviser to the President on Special Duties, Communication and Strategy, Dele Alake told State House Correspondents that the executive order is in fulfilment of his pledge to put Nigerians at the centre of government policies and address business unfriendly fiscal policy measures and multiplicity of taxes.

He said the executive order and three others were presidential interventions to address key concerns of manufacturers and other stakeholders regarding some recent tax changes.