The Value Added Tax (VAT) (Modification) Order, 2021 (“the Order”) was signed on 30 July 2021 by the Honourable Minister of Finance, Budget and National Planning (HMoFBNP), Mrs. Zainab Shamsuna Ahmed, pursuant to her powers under Section 38 of the VAT Act, Cap. V1, Laws of the Federation of Nigeria, 2004 (as amended). The Order was subsequently published by the Federal Government of Nigeria (FGN) in its Official Gazette No. 167, Vol.108 of 21 September 2021.

The Order replaces the VAT (Modification) Order 2020, amends the First Schedule to the VAT Act by defining and expanding the list of goods and services listed in the First Schedule to the VAT Act, and provides clarification on the amendments introduced to the VAT Act by Finance Act, 2020. 

This publication analyses the impact of the Order on taxpayers and businesses operating in affected sectors of the Nigerian economy.

1. General Implications of the Order

The Order introduces new definitions, and revised definitions, for some of the terms in the First Schedule to aid taxpayers’ interpretation and treatment of goods and services for VAT purposes. The Schedule to the Order also expanded the list of exempt goods and services with their relevant Common External Tariff (CET) code to provide additional relief to qualifying taxpayers. 

However, there are some amendments in the Order that may require further revision to ensure consistency with the Principal Act and other fiscal laws and policies in the country. For instance, the VAT Rate of Tax Chargeable Order, 2007 amended item 6 of Part I and Item 4 of Part II of the First Schedule to the VAT Act by excluding “non-oil exports which enjoy zero rated status” from VAT exempt status. Therefore, the deletion of non-oil exports from zero rated goods in the Order, without a concurrent amendment of items 6 and 4 of Parts I and II, respectively, to delete the following words “excluding non-oil exports which enjoy zero rated status” could be misinterpreted to mean that non-oil exports are now precluded from VAT exemption. Obviously, this cannot be the intention of the Order as it contradicts the Federal Government’s export

expansion policies and its intention to drive economic growth through fiscal incentives that encourage increased export capacity.

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