The Federal Government of Nigeria has in recent times, taken steps to review and introduce notable changes to the existing tax system. The changes include the introduction of a new Value Added Tax (“VAT”) rate which has been approved by the Federal Executive Council, the signing into law of the Police Trust Fund (Establishment) Act, as well as ongoing deliberations by the Federal Government to impose VAT on online transactions. Even more recently, the Central Bank of Nigeria as a step towards the nationwide implementation of the 2020 cashless policy, has imposed charges on bank withdrawals and lodgements above specified thresholds by individuals and corporate entities, in addition to already existing charges on withdrawals. The implementation of the imposed charges on bank cash withdrawals and lodgements is effective September 18, 2019.
This article examines the newly approved VAT rate and the police trust fund levy, x-raying the immediate impact of the administration of these new taxes on businesses as well as possible ripple effects on the economy at large.