TAIWO FAROTIMI
The Nigerian government has scrapped the Value Added Tax, VAT on residential properties. What this means is no VAT will henceforth be paid on such properties even when on lease or let. This was approved Wednesday in Abuja at the weekly federal executive council , FEC meeting.
The policy shift is one of the issues that emanated from the two executive orders and five amendment bills stamped by the august body.
Another ingredient of the amendments is that approval has also been granted for the company income tax to be amended. An immediate fall out of this is that the micro, medium and small scale enterprises, MSME operators can now have some tax relief. The proposal is that instead of the 20% income tax they are liable to pay now, they will henceforth pay 15%. The five percent relief is expected to improve profit merging and help keep such outfits afloat under the inclement economic condition the country is passing through. Perhaps that will also encourage them to freely make declaration to the tax authorities.
Kemi Adeosun, minister of finance briefed State House media men at the end of the FEC meeting. She told them that the approval followed the recommendation of the National Tax Policy Implementation Committee on tax law reform.
The minister who said the reform will in the short term incident loss of revenue from tax, explained that FEC bought the expert advice because it aligns with the objective of government to reduce the tax burden of Nigerians and also improve measures on the ease of doing business in the country. Hear her: “Majority of the provisions approved today are actually removing the tax burden and clarifying obsolete and ambiguous areas of tax. So for example for VAT there is to be an exemption for residential property, leases on rental, transport for the general public and life insurance.”
