Business, Featured
By Anayo Ezugwu
WITH the implementation of the new Value Added Tax, VAT, in Nigeria, banks operating in the country have adjusted the stamp duty charges on electronic and other taxable transactions with effect from February 1. This is in furtherance of the implementation of the new Finance Act recently signed by President Muhammadu Buhari.
In a notification to its customers, the banks said the Tax Identification Number would only be required to open or operate business accounts. Access Bank in its notification to customers stated that while the old bill stipulated five percent VAT, the new Act stipulated 7.5 percent.
On stamp duty charge, it stated that under the old bill, “N50 applied on electronic funds’ transfers or deposits of N1,000 and above,” adding that under the new Act, “N50 applied on electronic funds’ transfer or deposits of N10,000 and above.
“The Finance Bill, now called the Finance Act 2020, was recently signed into law by the President. The legislation is broad, covering many aspects of taxation and is specifically designed to stimulate small and medium business growth,” it said.
Another bank, FSDH Merchant Bank in its notification to customers stated, “Following the recent assent of the Finance Bill (now Finance Act 2020) by the Presidency, we write to inform you that all vatable transactions on your account will now attract a Value-Added Tax rate of 7.5 percent with effect from February 1, 2020.
“This means that VAT charges applicable on all vatable transactions in your account will be increased from five percent to 7.5 percent in compliance with the Act.”
In its part, First Bank stated, “In line with the federal government directives, please be informed that VAT on each eligible bank transaction or service will be charged at the new rate of 7.5 percent with effect from 1st February 2020.”
With the new charges, experts have called on the banks to educate their customers on items that are vatable.
Tion Williams, a taxation expert, called on the banks to sensitise the people on the recently enacted Finance Act. He said the new Act had a lot of benefits to businesses, especially Micro, Small and Medium Enterprises which people were unaware of as more emphases was given to VAT by the media.
He said the new tax bill will also motivate small scale businesses with less than N25 million turnovers to grow to a certain level before they would be taxed. “The whole attention has been on VAT, even the National Assembly focused on VAT, but the other aspects have been downplayed like the company income taxes.
“So the other taxes are actually affected, one is company income tax, the Petroleum Profit Tax equally has been affected, we also have what is called Capital Gain Tax, we also have Withholding Tax and we also have the stamp duties and Personal Income Tax. The TIN too has been affected, for instance, if you do not have a TIN you now by the law, you would not be allowed to operate your bank account,” he said.
According to Williams, there must be serious tax education by the government on what the citizens stand to gain from the bill and what they must do. He explained that in the finance bill, companies had been segmented into three categories which were small, medium and large.
Speaking at a recent two-day tax seminar organised by Okwudili & Co (Chattered Accountants) in Lagos, Udochukwu Ogbonna, immediate past executive chairman of Abia State Internal Revenue Services, AIRS, said the upward review of VAT from five percent to 7.5 percent, though a lofty idea, is coming at a wrong time.
He argued that although the VAT in Nigeria is below the world average, the federal government should have made the economy more vibrant before increasing VAT, which, he said, would lead to increase in prices of goods and services. He, however, explained that if Nigerians want to be sincere to themselves “VAT is not supposed to affect everything.”
Apart from the banks, the 7.5 percent VAT is also applicable to other utilities like electricity airtime, SMS and data bills.
– Feb. 7, 2020 @ 18:49 GMT |
Tags: VAT: Banks begin implementation on e-transactions
