Full list as FG introduces bill to exempt baby products, others from VAT

In a move aimed at easing the financial pressure on Nigerians, the Federal Government has proposed a new bill that seeks to exempt various essential products and services from Value Added Tax (VAT).

The bill, titled “A Bill for an Act to Repeal Certain Acts on Taxation and Consolidate the Legal Frameworks relating to Taxation and Enact the Nigeria Tax Act to Provide for Taxation of Income, Transactions and Instruments, and Related Matters”, was issued on October 4, 2024.

Among the items listed for VAT exemption are baby products and locally manufactured sanitary towels, pads, and tampons, a significant step toward making these necessities more affordable and accessible.

Additionally, military hardware, arms, ammunition, and uniforms supplied to the armed forces and security agencies are also set to be exempted from VAT under the proposed legislation. The bill further provides VAT relief for shared passenger road transport services, a measure designed to help reduce transportation costs for everyday Nigerians.

In the agricultural sector, VAT exemptions will apply to the purchase, hire, or lease of equipment such as tractors and ploughs, which are vital for farming activities. However, agricultural operators must initially pay the VAT and then apply for a refund from tax authorities.

Diplomatic missions and non-profit educational institutions will also benefit from this exemption, with goods and services supplied to these entities excluded from VAT. Government licenses, land or building transactions, and financial instruments, including securities, are likewise among the items slated for VAT relief.

Notably, supplies consumed within export processing or free trade zones for approved activities will also be VAT-free, further boosting economic activities in these zones.

However, the government retains the right to reimpose VAT on any of these exempted items. The bill includes a provision that allows the Minister to reinstate VAT on the listed products and services by issuing an official order published in the Government Gazette.

This flexibility ensures that while the exemptions will provide immediate relief, the government can adjust the tax framework as needed in the future.

The full list of items proposed for VAT exemption includes:

1. Baby products

2. Locally manufactured sanitary towels, pads, and tampons

3. Military hardware, arms, and ammunition

4. Uniforms supplied to the armed forces and paramilitary agencies

5. Shared passenger road transport services

6. Agricultural equipment (tractors, ploughs, etc.)

7. Goods and services supplied to diplomatic missions

8. Non-profit educational performances

9. Government licenses

10. Land or building transactions

11. Financial instruments (money, securities, and interests)

12. Supplies in export processing or free trade zones for approved activities.

This bill, if passed, is expected to provide significant economic relief, particularly for low-income families, students, and agricultural workers across the country.