The Federal Inland Revenue Service (FIRS) has issued a public notice on the VAT Modification Order, 2020. The Service noted that the notice, which is to give clarification on the Order, is sequel to the several enquiries received from taxpayers requesting to know whether or not some items are exempt from VAT in view of the inclusion of paragraph 2 of in the Modification Order.
The Service clarifies as follows:
- The main objective of the VAT Modification Order was to provide clear definition of each item in the First Schedule to the VAT Act through an extended list of items so exempted.
- Paragraph 2 of the Modification Order provides 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 Service further clarifies that the following items in the breakdown are note exempt from VAT as they were not listed in Schedule 1 of 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.
FIRS notifies the Public that the above items shall continue to be liable to VAT at 7.5% until otherwise provided in an appropriate statutory instrument.
You would recall that the Minister of Finance had earlier issued the VAT Modification Order, 2020 dated 4th February, 2020.