The Ministry of Finance has issued a Value Added Tax (Modification) Order, 2021 with a commencement date of 30 July 2021. The Order revokes previous orders and modifies the list and definitions of exempt items under the VAT Act.
Below are some of the major changes:
- Petroleum products – this is restricted to aviation turbine kerosene premium motor spirit, household kerosene, locally produced Liquefied Petroleum Gas (LPG), and crude petroleum oils.
- Renewable energy equipment.
- Raw materials for the production of baby diapers and sanitary towels.
- Locally produced animal feeds.
- Gas supplied by gas producing companies to electricity generating companies (GENCOs), electricity generated by GENCOs and supplied to National Grid or Nigeria Bulk Electricity Trading Company (NBET) and electricity transmitted by Transmission Company of Nigeria (TCN) to electricity distribution companies (DISCOs).
- Agricultural seeds and seedlings.
- All locally produced veterinary medicine .
- Military hardware, arms, ammunition and locally manufactured uniforms used by the armed forces, paramilitary and other security agencies of governments in Nigeria
- Previously, services rendered by Community Banks, People’s Bank and Mortgage Institutions were VAT exempt. The Order replaces “Community Banks” and “People’s Bank” with “Unit Microfinance banks”, defined as banks categorised by the Central Bank of Nigeria as Tier 1 or Tier 2 Unit Microfinance Banks.
- Shared passenger road transport services available for public use are VAT exempt. However, the Order excludes “leased, hired or rented motor vehicles or transportation apparatus for business or private use, or a car or ride hailing”.
- The exemption on air tickets sold by commercial airlines registered in Nigeria now specifically excludes hired or rented aircrafts or private jets. Also, private jets and their spare parts are VATable
Zero rated items
- ‘Non oil exports’ has been reclassified from the list of zero-rated items to exempt items.
Download the Federal Ministry of Finance VAT Modification Order, 2021