FIRS Clears Air On VAT Modification Order

By ABIODUN JIMOH

Federal Internal Revenue Service (FIRS) has clarified that 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.

The Executive Chairman of FIRS, Muhammad Nami made this clarification having received several enquiries from taxpayers requesting to know whether or not some items are exempted from VAT in view of their inclusion in paragraph 2 of VAT Modification Order 2020.

While clarifying further, Nami affirmed that the paragraph 2 of the modification order provided 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 one 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.

“Consequently, all taxpayers, tax practitioners, tax officials, other stakeholders and the general public should be guided accordingly,” he stated.