On the 24th of June, 2020, the FIRS issued a public notice to the effect that the following items stated in the VAT Modification order as VAT exempt are still subject to VAT. They include:
• natural gas;
• materials for pharmaceutical products;
• renewable energy equipment; and
• materials for baby diapers & sanitary towels.
By the provisions of Section 38 of the VAT Act, the Minister of Finance may by order published in the gazette-
• amend the rate of tax chargeable; and
• amend, vary or modify the list set out in the First Schedule to this Act (i.e. Goods & Services exempt)
The VAT Modification order issued by the Minister of Finance also states clearly that
“the extended list of items exempted from VAT in the First Schedule to the VAT Act is as specified in the Schedule to this Order.”
The provisions of the VAT Modification order with regard to the items exempt from VAT are clear, unambiguous, and is issued by the Minister of Finance within his statutory powers as conferred by the VAT Act. As such, it is binding on all shareholders in the Nigerian tax system which includes the FIRS.
The public notice issued by the FIRS is an administrative document and cannot override a piece of subsidiary legislation duly issued by the Ministry of Finance and published in the gazette. The FIRS can only provide clarifications and guidance on the procedure for the implementation of the provisions of the order and not attempt to vary, amend or modify the VAT Modification order. This is as decided by the Federal High Court in the 2015 case of Warm Spring Waters Nigeria Limited v. FIRS and Global Marine v. FIRS.
To download the FIRS Public Notice, please click here
The above is for informational purposes only and does not constitute professional advice by Blackwood & Stone LP.
For more information please contact:
Blackwood and Stone LP
+234 903 3501 613