Ministry of Finance issues a new VAT Modification Order to clarify VAT exempt items

 

The Federal Ministry of Finance has issued a Value Added Tax (Modification) Order, 2020 (the “Order”) with a commencement date of 3 February 2020.

The Order gives clarifications on the list of exemptions in the First Schedule to the Value Added Tax Act (as amended), including the following:

  1. Basic food items: These refer to Agro and aqua based staple food described as:
  • Additives i.e. honey whether raw or semi-processed
  • Bread (white and brown)
  • Cereals e.g. maize, rice, wheat, millet, barley, sorghum, oats, fonio, finer millet and others of the same kind, however supplied in such form as grain, flour, crop, bulk or retail, raw or semi-processed
  • Cooking oils e.g. vegetable oil, soya oil, palm oil, groundnut oil, shea butter, beniseed oil, olive oil, coconut oil and others of the same kind, provided that they are of a type and grade suitable for culinary purposes and do not contain any substance such as perfume that will make them unsuitable for culinary use
  • Culinary herbs e.g. curry, thyme, onions, ginger, mint and others of the same kind, raw and unprocessed for human consumption
  • Fish of all kinds other than ornamental whether live, fresh, frozen, smoked or dried
  • Flour and starch e.g. corn flour, plantain flour, cassava flour, beans flour, wheat flour, rice flour, yam flour, garri and others of the same kind, bleached or unbleached, refined or unrefined provided that it is suitable for culinary purposes
  • Fruits e.g. pineapples, oranges, mangoes, guavas, grapes fruit, banana, pawpaw and others of the same kind, whether it is fresh or dried.
  • Live or raw meat and poultry e.g. beef, goat, lamb, pork, chicken, and others of the same kind, whether live, butchered, complete, in parts, fresh, frozen, eggs and other of the same kind.
  • Milk whether fresh, liquid and powdered
  • Nuts e.g. groundnuts, walnut, cashew nut, hazelnut, kolanut, tigernuts, coconut and others of the same kind, if raw and unprocessed for human consumption, also roasted, fried, boiled, salted or in their shells.
  • Pulses e.g. beans, lentils, peas, chickpeas, tamarind and others of the same kind, if raw and unprocessed for human consumption, also roasted, fried, boiled, salted or in their shells.
  • Roots e.g. yam, cocoyam, sweet and irish potatoes, water-yam, cassava and others of the same kind, if raw and unprocessed for human consumption, also in form of flakes or flour for human consumption
  •  Salt for culinary use only including fine salt and in retail packs but excluding industrial salt.
  • Vegetables e.g. pepper, melons, lettuce, okro, cabbage, carrots and other of the same kind, whether fresh, dried or ground.
  • Water i.e. natural water and table water e.g. spring water, rain water, pipe borne water, well water and all natural water of the same kind, all table water other than sparkling or flavoured water.

The following exceptions have however been given to the definition of basic food items:

  • What is sold in restaurants, hotels, eateries, lounges and other similar premises
  • What is sold by contractors, caterers, and other similar vendors

2. Baby products: means products use for the use of babies from birth to 36 months (3 years) of age and described below:

  • Baby activity and entertainment products such as Baby safety care and home accessories. High chairs, cots/bassinets/baskets/cribs along with parts and accessories
  • Baby bathtub, sponges, towels, Baby grooming kit, Baby creams, Powders, lotions etc.
  • Baby carriage and parts such as Carriers/slings/bouncers/swing/rockers/ etc. along with parts and accessories.
  • Baby garments and clothing of any material
  • Feeding products such as feeding products, feeding bottle warmers and related accessories
  • Others such as baby monitors along with parts and accessories
  • Planes, spoons, cups, sippy cups etc. Breast pumps and accessories
  • Nursing and feeding pillows
  • Sanitary wares such as Diapers, wipes and related products, Diaper bags, potty and toilet training devices, baby mattress waterproof cover, Baby toiletries, changing table and mat, and
  • Others; include raw materials for the production of baby diapers and sanitary towels

3. Downstream Gas Utilization: refers to the marketing and distribution of natural gas for for commercial purposes and includes power plant, liquefied natural gas, gas to liquid plant, fertilizer plant, gas transmission and distribution pipelines.

The Order further gives clarification on the following:

4. Educational Books

5. Educational materials

6. Farming Machinery and Implements & Farming Transportation Equipment

The order also extends the exemptions on medical goods and services, to include healthcare related equipment, services and medicine for both humans and animals. cosmetology and fitness devices, spa, gymnasium and similar services are not VAT exempt.

Download the order for more details.

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