Uche Usim, Abuja
The Accountant-General of the Federation (AGF), Mr Ahmed Idris, on Wednesday disclosed that his office has begun implementation of the Finance Act, recently signed by President Muhammadu Buhari.
Consequently, government transactions now attract 7.5 per cent Value Added Tax (VAT) as stipulated in the new document.
Idris, who made the disclosure at a session with finance journalists, reiterated that the objectives of the Act centre on deepening fiscal equity by dismantling factors responsible for regressive taxation.
Other objectives are to reform domestic tax laws and ensure they align with global best practices; and introduce tax incentives for investments in infrastructure and capital markets.
He added that the new document aims at supporting existing small businesses and providing the suitable environment for new ones to sprout in line with the ongoing ease of doing business reforms.
It is also to raise revenues for the government by various fiscal measures, including an increase in the rate of Value Added Tax from five per cent to 7.5 per cent.
The bill also seeks to provide efficiency in the administration of individual income taxes in Nigeria.
Idris said: “already, the bill has become a law and it was imperative for his office to obey the law. Once it has been approved and launched, ours is to implement.
“I had to stop the payment of a certain amount on Tuesday because the transaction was processed based on five per cent VAT. Although the transaction originated last year before the new law became operational, but it was concluded this year and the new law applies.
“So, I sent it back for rectification. That’s the law and we should obey it. The payment for the transaction which occurred last year will not be made until the 7.5 per cent VAT is 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 is 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 it was debated and members of the public were sensitised and nobody can start deducting that VAT unless the bill is signed.
“Just yesterday, 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 at today.”
On the functionality of the transparency portal launched last year, Idris said; “we are now training personnel that will upload information into the portal because it’s very important to train them.
“We have to suspend that to focus on closure of account as required by law in December. Our staff are back and we will concentrate on financial portal.
“All policies of government bordering on transparency, and openness in government finances.”
He explained that these policies were necessary and vital for government to secure confidence of the people.
“You can’t be open if you are not transparent both in expenditure and revenue and make them open and accessible to the public.
“The public has to be informed especially where public funds are involved,” he added
On the area of public financial management reforms, he said that his office would soon commence training of technical personnel that would manage the recently launched Transparency Portal across Ministries, Departments and Agencies of government.