Prices of goods, services go up February 1

 

BY OUR EDITOR

Nigerians will begin to pay more for goods and services as prices go up effective February 1, 2020, with the implementation of the 7.5 per cent Value Added Tax (VAT) increase.

President Muhammadu Buhari recently signed into law the 2019 Finance Act, which amended certain aspects of the existing tax laws and introducing some new provisions, including the increase in VAT from 5% to 7.5%.

The Minister of Finance, Mrs Zainab Ahmed, had confirmed the February 1 implementation date in Abuja, at the inauguration of the board of the Federal Inland Revenue Service.

The law, according to the government, will take effect after all the necessary administrative procedures must have been completed, especially the gazetting of the Act by the Federal Ministry of Justice.

Already, some companies have issued notices informing customers of the increase in prices of goods.

A paint manufacturing company based in Ikeja is said to have alerted its customers that “effective February 1, 2020, there will be a slight adjustment in the prices of its products.”

READ: Nigeria hopes to earn N2 trillion in 2020 with VAT increase

Even though no specific figure or percentage was mentioned as increase, our source revealed that the notice was clear on the value added tax increase from 5% to 7.5%.

“We were told that there will be increase in prices from February 1. We don’t know how much, but what I can tell you is that there will be an increase in VAT,” our source who works in the sales office informed.

Asked if the company will take advantage of the VAT increase to further increase the cost of its products beyond the additional 2.5% (being the increase on the previous 5% VAT regime), our source declined to comment, saying such information had not been made available.

The Finance Minister said once a bill was signed into law, it would take effect immediately, but noted that there were certain administrative procedures and formalities to be finalised before commencement.

The VAT increase which is meant to help government achieve its revenue projections for the 2020 budget is a part of the tax reforms included in the 2019 Finance Act.

She said with the Act, there would be more revenue to finance key government projects especially in the areas of health, education and critical infrastructure.

She said, “The implementation of Value Added Tax is to take effect from February 1, 2020 after all the necessary administrative procedures have been completed, especially the gazette of the Act by the Federal Ministry of Justice.”

The Minister’s remark contradicted an earlier claim by the Accountant General of the Federation, Ahmed Idris, who said the new VAT increment took effect from January 13 when the 2020 Finance Bill was signed into law.