Thursday, May 23, 2024

FG implements Finance Act, charges 7.5% VAT on transactions

The Federal Government has begun the implementation of some aspects of the Finance Act with the imposition of 7.5 per cent Value Added Tax on government transactions.

The Accountant-General of the Federation, Alhaji Ahmed Idris, confirmed the development in an interview with journalists on Wednesday in Abuja.

The move followed the signing of the finance bill into law on Monday by the President, Major General Muhammadu Buhari (retd.).

The objectives of the Act are to strategically promote fiscal equity by mitigating instances of regressive taxation; reform domestic tax laws to align with global best practice; and introduce tax incentives for investments in infrastructure and capital markets.

It is also aimed at supporting small businesses in line with the ongoing ease of doing business reforms, and raise revenues for the government by various fiscal measures, including an increase in VAT from five per cent to 7.5 per cent.

Idris said since the law had been signed, it was imperative for his office to obey the law.

Specifically, the Accountant-General said he had to stop the payment of a certain amount on Tuesday because the transaction was processed based on five per cent VAT.

According to him, payment for the transaction which occurred last year would not be made until the 7.5 per cent VAT was factored into the cost of transaction.


When asked if it was right to impose VAT of 7.5 per cent on a business transaction that had already been done before the signing of the finance bill, he said VAT was deducted at the point of payment rather than the point of purchase.

He said, “You cannot implement a budget unless National Assembly passes it and Mr President signs it.

“So the decision to increase VAT was debated and members of the public were sensitised and nobody can start deducting that VAT unless the bill is signed.

“Just yesterday (Tuesday), I saw a payment which was done last year in December and when I checked the payment, the VAT on it was five per cent and I said no, it must be 7.5 per cent because the five per cent VAT has been overtaken by events because that is the law as of today.

“So I stopped it and asked them to go and recharge 7.5 per cent. You cannot implement something unless you have the instrument whether administrative or legal for it to be implemented.”

On public financial management reforms, Idris said that his office would soon commence training of technical personnel to manage the recently launched Transparency Portal across Ministries, Departments and Agencies of government.

The Federal Government had last year launched its financial transparency, which was meant to open government financial activities to public scrutiny in terms of revenue and expenditure of MDAs.

With the portal, the Accountant General of the Federation is mandated to publish daily treasury statement to provide information about what came into the national treasury and what was spent on government programmes.

The Treasury is requested to publish payments of N10m and above while all MDAs must publish payments above N5m made out of all public funds under their purviews.

Apart from the treasury portal, the AGF said the government was implementing series of financial reforms to reposition the public sector.

… disburses $155m youth employment fund to 16 states

A total of $155m has been disbursed by the Federal Government to 16 states under the Youth Employment and Social Support Programme since its inception in 2013.

The $155m, when converted based on the official N305 to a dollar official exchange rate of the Central Bank of Nigeria amounts to about N47.27bn.

The National Coordinator, Youth Employment and Social Support Operations of the Federal Government, Mrs Hajara Sani, said this in Abuja at a Social Protection Practitioners and Academics dialogue.


She said that the $155m was disbursed out of the $300m that was set aside by the World Bank for the programme.

Sani added that currently, about 500,000 people were benefiting from the programme.

YESSO is a programme aimed at strengthening the state-level social safety net systems and reducing vulnerability of poor youth and women through increased access to work opportunities and promoting human capital development.

The programme was introduced in 2013 by the World Bank in collaboration with the Federal Government to improve the lives of the poor and vulnerable in the society.

She said that so far, the government was implementing the programme to assist the poor and vulnerable in 16 states.

Some of the states are Bauchi, Cross River, Ekiti, Kogi, Kwara, Niger, Osun, Oyo, Adamawa, Taraba, Gombe, Borno, Sokoto, Yobe and Ondo.

She said, “We have over 500,000 people that benefited from YESSO and 80 per cent of them are still on the programme.

“The programme is a package of $300m IDA, of which the end date is fast approaching and we needed to disburse quickly and there was a restructuring but so far we have expended $155m.

“Sixteen states are taking part. It has been a credit to the states and it has to be state-driven.

“States have to express interest and the states that have expressed interest and were able to meet the eligibility criteria are those we have on ground.”

In her welcome address, the Special Adviser to the President, Major General Muhamadu Buhari (retd.), on Social Investment Programme, Mrs Maryam Uwais, said that the time had come for government to build a system that would be inclusive and sustainable.

Uwais noted that a robust social protection system would help the poor have access to essential services such as education and healthcare.

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