JUST IN: FG approves 40% increase in VAT
Contrary to reports that the federal government had proposed N9.7 trillion budget for 2020 fiscal year, the Minister of Finance, Mrs. Zainab Ahmed, disclosed Wednesday that the Federal Executive Council (FEC) had approved N10.07 trillion budget proposal for 2020.
Briefingr at the end of the first FEC meeting since the swearing in of new ministers, Ahmed said the council also approved 2020-2022 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) with 10.07trillion budget proposal for 2020 fiscal year, revenue target of N7.5 trillion, $55 per barrel oil benchmark, N305/$ exchange rate.
The minister also said the council approved the increase of value added tax (VAT) from the current 5 percent to 7 percent.
She was however quick to add that implementation of the new VAT rate would be subject to amendment of the extant VAT law.
According to her, only 15 per cent of VAT revenues accrue to the federal government while the bulk of the remaining 85 percent goes to the states, explaining further that the planned increase was necessitated by the need to assist the states in shoring up their revenues to meet the new minimum wage demand.