FG exempts milk, table water, others from VAT increase


The Federal Government on Tuesday said it would exempt 10 food items, including milk, table water, barley and sorghum among others from the 7.5% Value Added Tax (VAT) increase it proposed in early September.

President Muhammadu Buhari made this known on Tuesday in its 2020 Appropriation Bill presented to a joint session of the National Assembly.

Presenting the Bill to federal lawmakers, the president said that the new VAT already exempts pharmaceuticals, educational items, and basic commodities, but section 46 of the Finance Bill 2019 expands the exemptions to include milk, natural water and table water.

Others are brown and white bread; cereals including maize, rice, wheat, millet, barley and sorghum; fish of all kinds; flour and starch meals; fruits, nuts, pulses and vegetables of various kinds; roots such as yam, cocoyam, sweet and Irish potatoes; meat and poultry products including eggs; and salt and herbs of various kinds.

The increase of VAT to 7.5% from the current rate of 5% was first proposed by the government in a Federal Executive Council meeting held on 11 September 2019. The government said that the process of increasing the VAT rate will involve extensive consultations with states and local governments and others in the public and private sectors. The process could ultimately result in an amendment to the VAT law before the new rate will take effect in 2020.

Part of the 2020 budget is estimated based on the revenue to be generated from the increased VAT rate.

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