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VAT In Nigeria: The Rate And Every Other Thing You Should Know

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VAT In Nigeria: The Rate And Every Other Thing You Should Know

Value Added Tax (VAT) in Nigeria has for a while now been making news headlines across the country.

Recently, Governor Nyesom Wike of Rivers dragged the federal government to court over the allocation of revenue generated from VAT in Nigeria.

Wike argued that his government should be the legitimate collector of the tax type and not the Federal Inland Revenue Service (FIRS), as the case is.

Surprisingly to members of the public, Governor Babajide Sanwo-Olu of Lagos joined in the suit against the federal government. In fact, days after Justice Stephem Pam of a Federal High Court sitting in Port Harcourt ruled that Rivers State government had the powers to collect VAT within its territory, Sanwo-Olu signed the controversial VAT bill into law.

VAT In Nigeria: The Rate And Every Other Thing You Should Know
Governor Nyesom Wike of Rivers State

However, while an appeal court held that all parties in the VAT matter should maintain the existing status quo, Newsrand presents an explainer of everything you need to know concerning the tax type.

Understanding this tax type

Known in other countries as Goods and Services Tax (GST), VAT in Nigeria is a consumption tax type that is levied on buyers.

In conciseness, consumers pay a certain percentage amount of money used for goods and services at every stage of their productions. One can also say consumers pay VAT at every stage of a supply chain that value is added.

Current VAT rate in Nigeria

As it is in every other country that taxes her citizenry on consumed products and services, there is a rate imposed on Nigerian consumers.

The current VAT rate in Nigeria is 7.5 percent. It used to be 5 percent, but this tax policy was reviewed in February 2020.

How to calculate VAT in Nigeria

Imagine you being a shoe vendor, and you sell your products for N10,000 each. The VAT chargeable on this amount is 7.5 percent, which is an additional N750.

With this, you are expected to sell a pair of shoes for N10,750. While you will retain the N10,000, you are expected to remit N750 to the FIRS as VAT.

How to get VAT number in Nigeria

First, it is pertinent to note that every taxable person in Nigeria shall register their businesses with the FIRS upon the commencement of their commercialised activities.

Failure to do this registration will attract penalties, go to any FIRS office close to you with the following documents:

  • Memorandum & Articles of Association
  • Certificate of incorporation: CAC2, CAC7
  • Duly filled and officially stamped VAT form 001
  • Utility bill
  • Application letter on company letter headed paper

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Economy

N-power Batch C Deployment: How Non-graduate Can Check Training Posting

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N-power Batch C Deployment: How Non-graduate Can Check Training Posting

It is no longer news that the Federal Government has announced the deployment of N-Power Batch C non-graduate tech-software beneficiaries.

However, while some of the beneficiaries have already checked their postings, Unmask NG understands that others were struggling to check theirs.

If you are one of the N-power beneficiaries having issues in checking their postings, follow the steps below:

1. Go to https://www.nasims.gov.ng

2. Click on the deployment page to see your training posting status.

NB: If you are posted, your training venue, training track, training main, training life skills, and remuneration details will be displayed.

It would be recalled that a few months after the inauguration of 510,000 Batch C1 graduate and non-graduate volunteers, a training portal had been opened for beneficiaries.

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Economy

Dollar To Naira: World Bank Tackles CBN On Forex Management

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Dollar To Naira: World Bank Tackles CBN On Forex Management

Dollar to naira alarming exchange rate has been a major issue causing setbacks for most businesses in Nigeria, and the World Bank has broken its silence about it.

In an interview published on Punch, Shubham Chaudhuri, World Bank’s Country Director for Nigeria, said the Central Bank of Nigeria (CBN) was deploying policies that don’t have the potency of addressing the lingering forex challenge.

According to Chaudhuri, even though the World Bank aligned with the CBN on the need to achieve price stability as one of its core mandates, it differed on the method and choice of policies in achieving this.

His words: “Nigeria, like many other countries, has gone through a very tough time, especially last year, with the price of oil falling, which had an immediate effect in terms of foreign currency inflows into the country because sales of crude oil are one of the biggest sources of foreign currency inflows into Nigeria.

“So, we recognise that in the middle of the economic crisis, Nigeria was under tremendous pressure, alongside the naira. One of the core mandates of CBN is price stabilisation. However, we differ with the CBN on how best this aim can be achieved.”

World Bank advises CBN on how to manage dollar to naira

For World Bank, it is not a smart thing to do for CBN to have multiple exchange rates, amongst other policies that bottle it up with pressures.

The World Bank director explained that it is pertinent for the apex bank to allow the naira to respond to pressures from market realities on its own.

“In the FX market, the way it works is to let the naira respond to very real pressures but in a way that let the steam off rather than bottle it. Because if you bottle it, the pressure does not get released, and at some points, there has to be a massive adjustment.

“Over the last year, the pressures have been building up. Finding ways to release some of the pressures by letting the naira adjust more gradually would help and keep the naira, in a long run, from depreciating by a very large amount,” he stated.

Chaudhuri also advised the central bank to adopt a more predictable, clear mechanism for the forex, as he expressed optimism that it would help in restoring and enhancing the confidence in the market.

“We haven’t had foreign portfolio investors come back to Nigeria since the COVID crisis, not at the levels that we saw earlier. Some of that has to do with what is happening to interest rates locally but some of that also has to do with their confidence – that if they do come into the market, they will be able to get the FX out again, repatriate their profits.

“What’s more concerning is foreign direct investors. FDI has not recovered. That also has to do partly with the level of confidence in terms of the ability to predictably access foreign exchange. While we understand and see what the CBN’s overall objectives are, we do differ on how those objectives might be obtained,” the World Bank boss added.

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Economy

NNPC: Petrol Subsidy May Hit N3trn

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NNPC: Petrol Subsidy May Hit N3trn

The annual subsidy on Premium Motor Spirit (petrol) will rise to N3 trillion if the current market realities persist. This is according to Petroleum Products Marketing Company (PPMC), a subsidiary of the Nigerian National Petroleum Corporation (NNPC).

Making this disclosure at a panel session during the 15th OTL Africa Downstream Week 2021 in Lagos, the Managing Director of PPMC, Isiyaku Abdullahi stated: “At $80 crude oil, 60 million litres daily consumption and N411/$1 forex, PMS under-recovery per litre will be N138/litre. Daily PMS under-recovery will be N8.3bn. Annual PMS under-recovery will escalate to N3 trillion.”

Newsrand understands that the sharp rise in global oil prices to record highs had pushed the subsidy cost being incurred by the Federal Government to N8.28 billion daily.

The subsidy, which the NNPC prefers to call ‘value shortfall’ or ‘under-recovery’, resurfaced in January this year as the government left the pump price of petrol unchanged at N162-N165 per litre despite the increase in oil prices.

The Federal Government had in March 2020 removed petrol subsidy after reducing the pump price of the product to N125 per litre from N145 following the crash in oil prices.

The NNPC, which has been the sole importer of petrol into the country in recent years, has been bearing the subsidy cost since it resurfaced.

Isiyaku said with the rehabilitation of the country’s refineries and the construction of condensate refineries as well as the Dangote refinery, the Nigerian fuels market would transform from import-dependent to a net exporter by 2024.

He said full deregulation of the downstream sector might push an accelerated switching to Compressed Natural Gas and Liquefied Petroleum Gas, subject to global energy prices trend in the near term.

According to him, the Petroleum Industry Act presents a unique opportunity for investments across the value chain.

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