The House of Representatives yesterday endorsed the increase of value-added tax (VAT) from five to 7.5 percent as proposed by the executive in the 2020 appropriation bill. The approval was given after passing for second reading a bill for an act to amend the companies income tax, value-added tax, customs and excise etc. (Consolidation) Act, personal income tax act, capital gains tax act, stamp duties act and petroleum profit tax act to provide for the review of tax provisions and make them more responsive to tax reform and for related matters. Leading debate on the specific sections of the bill, deputy House leader, Hon. Peter Akpatason (APC, Edo) submitted that the whole essence of the proposed legislation was to create an enabling environment for business in the country.
He said Section 4 of the Value-Added Tax act was amended by substituting ‘5 per cent’ with ‘7.5 per cent’ adding that section 2 of the VAT act, cap VI, laws of the Federation of Nigeria, 2004 was reenacted to read “the tax shall be charged and payable on the supply of all goods and services in Nigeria other those listed the first schedule by this act.” Akpatason explained that for the purposes of this act, goods and services shall be deemed to be supplied in Nigeria if “the goods are physically present in Nigeria at the time of supply, imported into Nigeria for use by a person assembled in Nigeria or installed in Nigeria.
“The beneficial owner of the rights in or over the goods is a taxable person in Nigeria and the goods or right thereof is situated, registered or exercisable in Nigeria” Giving further details on the bill, chairman of the House Committee on Finance, Hon. James Faleke (APC, Lagos) said the bill seeks to amend a total of 11 sections, including registration and deregistration requirements.
He said section 8 of the VAT Act is amended to read “a taxable person shall upon commencement of business register with the service for the purposes of tax” adding that section 10 of the VAT Act is renamed ‘nonresident companies to include the tax on invoices saying the ‘a non-resident company shall include the tax on its invoices for the supply of taxable services” Attempts by Hon. Ossai Nicholas Ossai (PDP, Delta) to stop the passage of the bill was however met with stiff opposition led by the deputy speaker, Hon. Ahmed Idris Wase. Ossai had pleaded with his colleagues not to rush the passage of the bill because the tax was a very delicate issue to be glossed over.
He argued that many aspects of the bill touched on the lives of the masses and it would not be proper for the House to approve what may bring further hardship to the people. According to Ossai: “Majority of the nation’s roads were in deplorable condition and we may argue that flying is a luxury but even the common man sometimes fly because of the menace of kidnappers on the road. I think we should delay this bill and take a more critical look at it.”
But in his response, Wase said every observation on the bill should be reserved for a public hearing because of the issues addressed in the bill were too important for the economy to be put in view. Similarly, chairman of the House Committee on Public Accounts, Hon. Wole Oke (PDP, Osun) supported the position of the deputy speaker, saying it was better to allow the bill to pass through second reading. “I would like to agree with the deputy speaker that this bill should be referred to the relevant committee for further legislative action.” Ruling on the bill, Speaker Femi Gbajabiamila referred it to the Committee on Finance for further legislative action.