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EXPLANATORY MEMORANDUM

This Act amends the Value Added Tax No. 102, 1993 and, among other things, makes it more responsive to the tax reform policies of the Federal Government and enhance its implementation and effectiveness.                 

VALUE ADDED TAX (AMENDMENT) ACT 2007

AN ACT TO AMEND THE VALUE ADDED TAX ACT No, 102, 1993 AND FOR RELATED MATTERS

ENACTED by the National Assembly of the Federal Republic Of Nigeria

[16th Day of April, 2007]

VALUE ADDED TAX (AMENDMENT) ACT 2007,  No., 12

An Act to amend to Value Added No, 102, 1993 and for related matters.

ENACTED by the National Assembly of the Federal Republic Of Nigeria

[16th Day of April, 2007]

1.       The Value Added Tax Act (in this Act referred to as "the Principal Act") is amended as set out in this Act.

2.       'Substitute for  the words "VAT Office”  the words  ” Tax Office'' wherever  they occur in the Principal Act.

3.       Substitute for section 4 of the Principal Act a new section "4"  “Rate of tax 4. The tax shall be computed at the rate of  5 per cent on the value  of all goods and services as determined, under sections 5  and 6  of this Act, except  that

Goods and services listed under   Part III of the  First Schedule to this Act shall be   taxed at zero rate."

4.      substitute for the word “him”, the words “the person” in this section 10 (1) of  the Principal Act.

5.       Section 10 A of the principal Act is  amended by-

(a)      inserting immediately after the existing subsection (1), the following new subsection (2)"—

"(2)    The Service may, by notice, determine and direct the companies  operating  in the oil and gas sector which shall  deduct VAT at source and  remit same to the Service"   and . . .

(b)      re-numbering the existing subsection "(7)" as subsection "(3 )".

6.       Insert the following new section IIA immediately after the existing section II of the Principal Act--

"Tax invoice II A (I) A taxable person who makes a taxable supply shall, in   respect of that supply, furnish the purchaser with a tax invoice containing, inter alia, the following.---

          (a)      tax payers identification number;'

(b)      name and address;

          (c)      VAT registration number;

          (d)      the date 'Of supply ;

(e)      name of purchaser or client;

          (f)      gross amount of transaction; and

(g)      tax charged and rate applied ..

(2)      A tax invoice shall be issued on supply whether or not payment is made at the time of supply."

7.       Section 12 of the Principal Act is amended-

(a)      in subsection (I ), by substituting for the figure and word "30th day" for the   figure and word "21^st  day" ;

(b)      by inserting immediately after subsection (2), the following new subsection"(3)"

(3)      In this regard, any payment made to duly authorised government agents shall be deemed to have been made to the Federal Inland Revenue Service."

8.       Delete section 13 (3) of the Principal Act.

9.       Substitute for the figure "16", the figure "15" in section 15 of the Principal Act.

10.     (1)      Substitute for section "16(2)" and (3) of the Principal Act, a new section 16(2) and (3)-

"(2)    A taxable person who is aggrieved by an assessment made on the person   may file an objection to the Federal Inland Revenue Service.”

“(3)    An appeal before the Federal inland Revenue Service shall be determined within 30 days."

(2)      Insert new section "16 (4)" and "(5)" immediately after the new section “16 (2)" and "(3)"

(4)      Appeal from the decisions of the Federal Inland Revenue Service shall be made to the Tax Appeal Tribunal.

(5)      An appeal from the Tax Appeal Tribunal shall be made to the Federal High Court.

II.       Substitute for section 36 of the Principal Act a new section “36”--“36. Notwithstanding any formula that may be prescribed by any other law, the revenue accruing by virtue of the operation of this Act shall be distributed as follows-

(a)      I5% to the Federal Government;.

(b)      50% to the State Governments and the Federal Capital Territory Abuja ; and

(c)      35% to the Local Governments.

Provided that the principal of derivation of not less than 20% shall be reflected"-in the-distribution of the allocation amongst  States and local Governments as  specified  in sub paragraphs (b) and (c) of-this Section.

12.     Insert the interpretation  of the following accordingly in section  42 of the Principal Act-.

"exported service" .means “Service performed by a Nigerian resident or a Nigerian company to a person outside Nigeria:;

"imported service" means “service rendered in Nigeria by a non-resident person to a person inside Nigeria”;

"taxable person" includes “an individual or body of individuals, family,corporations  sole, trustee or executor or a person  who carries out in a place an economic activity a person exploiting  tangible or intangible  property for the purpose of obtaining income there from by way of trade or business or a person or agency  of   government acting in that capacity”.

13.     The First Schedule to the Principal Act is amended-

(a)      by substituting for paragraph 7, the following new paragraph "7", 

"7. Plant, machinery and goods imported for use in the export processing zone or free trade zone:

“Provided that 100 per cent production of such company is for expert otherwise  tax shall accrue proportionately on the profits of the company"; and

(b)      inserting a new "Part Ill" as follows-

"Part III-

zero rate goods and services

1.       Non-oil exports.

2.       Goods and services purchased by diplomats.

3.       Goods purchased for use in humanitarian donor funded projects."   'humanitarian donor funded project' includes projects undertaken by Non-Governmental Organizations and Religious and Social Clubs or Societies recognized  by law whose activity is not for profit and in the public interest."

14.     Appeals shall be as in the Federal Inland Revenue Service Act.

15.     This Act may be cited as the Value Added Tax (Amendment) Act, 2007.

I certify, in accordance with Section 2 (1) of the Acts Authentification Act, Cap. 4, Laws of the Federation of Nigeria 1990, that this is a true copy of the Bill passed by both Houses of the National Assembly,

NASIRU IBRAHIM ARAB,

Clerk to the National Assembly

16th Day of April. 2007

I certify that this Bill has  been carefully compared by me with the decision reached by the National Assembly and found by me to be true  and correct decisions of the Houses and is in accordance with the provisions of the Acts Authentication Act Cap, -I. Laws of the federation of Nigeria.1990

Nasiru  Ibrahim Arab
Clerk Of the  National Assembly
16^th  Day  of  April. 2007

I ASSENT

Chief Olusegun Obasanjo
President of  the Federal Republic of  Nigeria
16^th  Day of April, 2007