The Federal Executive Council on Wednesday approved an increase in the Value Added Tax (VAT) payable in Nigeria.
The Minister of Finance, Zainab Ahmed, announced the approval while briefing journalists after the FEC meeting presided by President Muhammadu Buhari.
Mrs Ahmed said the VAT was increased from the current 5 per cent to 7.2 per cent.
“We also reported to council and council has agreed that we start the process towards the increase of the VAT rate.
“We are proposing and council has agreed to increase the VAT rate from 5 per cent to 7.2 per cent,” she said.
Mrs Ahmed gave an increase in revenue accruable to state governments as one of the reasons for the increase.
“This is important because the federal government only retains 15 per cent of the VAT, 85 per cent is actually for the states and local government and the states need additional revenue to be able to meet the obligations of the minimum wage.”
The minister, however, said the implementation will not be immediate as there was the need to amend the current law.
“This process involves extensive consultations that needs to be made across the country at various levels and also it will involve the review of the VAT Act.
“So, it is not going to be implemented immediately until the Act is reviewed,” she said.
She said the increase in the VAT was also included in the government’s revenue projection for 2020.
“Following these assumptions, the total revenue estimate in the sum of N7.5 trillion for the year 2020 and N2.09 trillion that will be accruing to the federation account and the VAT respectively.
“There will of course be the distribution to the three tiers of government based on the statutorily revenue sharing formula as defined in the constitution and to this effect, it means the federal government will be receiving proposed aggregate of N4.26 trillion from the federal account and the VAT pool, while the states and the local government are expected to receive N3.04 trillion and N2.27 trillion respectively,” she said.
Mrs Ahmed also spoke on the government’s planned expenditure for 2020. She said about N2.45 trillion has been proposed for debt servicing.
“The expenditure for the year 2020 is in the total sum of N10.07 trillion. This is three per cent less than the approved expenditure in the 2019 budget that has been passed into law. The total expenditure includes statutory transfers, non-debt recurrent expenditure such as salaries and pensions and also the Social Intervention Programme.
“The 2020 budget has a debt service estimated at N2.45 trillion and a sinking fund to retire maturing obligations issued to local contractors and other creditors in the sum of N296 billion. So there is a total sum of N3.43 trillion that is provided for personnel and pension cost inclusive of N218 billion for the top 19 government-owned enterprises in the country. This represents an increase of N453 billion over the 2019 approved budgetary expenditure. This also implies a 40 per cent of this recurrent expenditure to the projected revenue.
“The budget deficit is projected at N2.15 trillion in the year 2020 and this is lower than what was approved in the 2019 budget which was N2.47 trillion.
“Let me state that these projections include drawdowns on project tied loans and these represent 1.51 per cent of estimated gross domestic product (GDP). This is well below what is allowed by the Fiscal Responsibility Act of 2007 which is still put at 3 per cent.
“I want to add that council approved our presentation and so the next phase for us is to consult with the National Assembly and then the Medium Term Expenditure Framework (MTEF) to the National Assembly for their own view and subsequent approval,” she said.
The 2020 budget proposal is expected to be submitted to the National Assembly when they reconvene from their recess later this month.
Senate President Ahmed Lawan has said the National Assembly would pass the budget before the end of the year if it receives it early from the Executive.
CBN Introduces Charges on Deposits, Withdrawals Above N500, 000
The Central Bank of Nigeria on Tuesday said that the nationwide implementation of the cashless policy will begin by March 2020.
The apex bank said this in a circular to all Deposit Money Banks in the country.
It said that implementation of the policy would signal the imposition of charges on deposits in addition to already existing charges on withdrawals.
According to the circular, the charges, which take effect from Wednesday (today) will attract three per cent processing fees for withdrawals and two per cent processing fees for lodgments of amounts above N500, 000 for individual accounts.
For corporate accounts, the apex bank in the circular said that DMBs would charge five per cent processing fees for withdrawals and three per cent processing fee for lodgments of amounts above N3, 000, 000.
The statement, however, disclosed that the charge on deposits would apply in Lagos, Ogun, Kano, Abia, Anambra, and Rivers States as well as the Federal Capital Territory.
It added that the implementation of the cashless policy would take effect from March 31, 2020.
To further promote the cashless policy and enhance the collection of applicable government revenues, the CBN also announced a review of the process for merchant settlement.
It added that with effect from Tuesday, September 17, the CBN had given approval for banks to unbundle merchant settlement amounts and charge applicable taxes and duties on individual transactions as stipulated by regulations.
A statement signed by the Director, Payments System Management Department, CBN, Sam Okojere, said a downward review of the Merchant Service Charge had been approved.
It said henceforth, the charges had been reduced from 0.75 per cent capped at N1, 200 to 0.50 per cent capped at N1, 000.
Buhari Sacks Osinbajo’s Team, Appoints Soludo, Others in New Economic Team
President Muhammadu Buhari yesterday replaced the Economic Management Team (EMT) headed by Vice President Yemi Osinbajo with an Economic Advisory Council (EAC).
The new EAC, which reports directly to the president, will be chaired by an economist, Prof. Doyin Salami.
Buhari’s Special Adviser on Media and Publicity Femi Adesina in a statement said the EAC would advise the president on economic policy matters, including fiscal analysis, economic growth and a range of internal and global economic issues, working with the relevant cabinet members and heads of monetary and fiscal agencies.
He said the council, which is expected to assist the president in the development of critical policies, would hold monthly sessions.
Other members of the council are: Dr. Mohammed Sagagi (vice chairman), Prof. Ode Ojowu (member), Dr. Shehu Yahaya (member), Dr. Iyabo Masha (member), Prof. Chukwuma Soludo (member), Mr. Bismark Rewane (member), and Dr. Mohammed Adaya Salisu (secretary).
Adesina said: “This advisory council will replace the current EMT and will be reporting directly to the president. The EAC will have monthly technical sessions as well as scheduled quarterly meetings with the president. The chairman may, however, request unscheduled meetings if the need arises.”
Membership of the disbanded EMT, chaired by Osinbajo, had the following members: Minister of Finance; Minister of Budget and National Planning; Minister of State for Budget and National Planning; Minister of Industry, Trade and Investment; Minister of Agriculture; Minister of Information and Culture; Governor of the Central Bank of Nigeria; Special Adviser to the President on Economic Matters; Director-General of the Budget Office; Director-General of the Debt Management Office; and Director-General of the National Bureau of Statistics.
The team met weekly at the State House.
FBNQuest Trustees Marks 40 Years of Preserving Legacies in Nigeria
FBNQuest Trustees Limited, an FBN Holdings company has announced the celebration of its 40th anniversary as a leading provider of world-class trust and estate planning services in Nigeria. The event themed “A Legacy that Preserves Legacies” was held on Friday, 13 September 2019 at Landmark Event Centre in Lagos
The event presented an opportunity for FBNQuest Trustees to share key insights on the importance of Corporate Trust Management, Estate Planning, and Wealth Transfer, which are crucial elements to ensuring the preservation of legacies. Dr. Omobola Johnson, Senior Partner at TLcom Capital LLP and former Minister for Communication Technology, delivered the keynote address at the event.
FBNQuest Trustees was incorporated as Standard Trustees Nigeria Limited on August 8, 1979. The company at the time was a wholly owned subsidiary of First Bank of Nigeria Limited, which was known as Standard Bank of Nigeria Limited. The name Standard Trustees Nigeria Limited was changed to First Trustees Nigeria Limited in March 1980; and in April 2014 it was renamed FBN Trustees Limited to align with the FBNHoldings group naming convention. In November, 2017 it was again re-named FBNQuest Trustees Limited to signal its membership of the FBNQuest family, and its commitment to partnering with its clients on their quest to define and achieve financial success.
FBNQuest Trustees is modelled as a representation of the forward thinking culture of the FBN Holdings Plc, to improve and develop specialised capabilities within the trusteeship, asset and fund management services of the Nigerian financial system. Today, the company specialises in providing Investment Advisory Services, Corporate, Public and Private Trust Management; and as a part of FBNQuest draws on the trailblazing spirit, and a consistent focus on excellence to deliver exceptional services to clients.
Over the past 40 years, FBNQuest Trustees has not only become a leading trust company in Nigeria, but also a key pillar in the business of trusteeship. To highlight some of its key achievements over the years, the company continues to be the preferred local partner for international and multilateral entities looking to have businesses in Nigeria, and in 2013 served as the sole bond trustee on the very first bond issued by a multilateral institution in Nigeria (International Finance Corporation (IFC) $50,000,000 fixed rate senior unsecured bond).
FBNQuest Trustees is the first trust company to publish an educative compendium on estate planning to actively engage, and educate stakeholders, on the importance of Estate Planning in Nigeria, through its Legacy Series; and is a pioneer for Islamic finance in Nigeria, which led to its co-management of the first government issued Sukuk instrument launched by the Federal Government of Nigeria in 2017. The company also partnered and organised a stakeholder engagement on Voluntary Asset and Income Declaration Scheme (VAIDS) and its implications for estate planning.
Speaking about the milestone celebration, the Managing Director and Chief Executive Officer of FBNQuest Trustees, Mr. Adekunle Awojobi, emphasised the firm’s impact on trusteeship business in Nigeria, and by extension, the economy. He said, “From when we began our journey in 1979, FBNQuest Trustees has delivered impeccable solutions for the safekeeping of our clients’ assets, the transfer of generational wealth, and the preservation of their legacies. We are extremely proud to be a part of the 125 year old legacy of First Bank of Nigeria Limited, and the rich heritage of FBNHoldings as we celebrate a 40 year track record of distinction, dependability and professionalism in the trustee business.”
“We want to thank everyone who has contributed to the growth of the company over the years, as we continue to provide excellent services to our clients. We also take this opportunity to recommit to excellently serving our clients across diverse sectors to ensure that their legacies are preserved.” He added.
In terms of growth and financial performance, the company has continuously delivered shareholder value in alignment with the mandate of the Group. From a share capital of about N30 million in 90s, the company has increased to a share capital of N3billion in 2019; and has grown its profit after tax (PAT) year on year consistently, with liquid trust assets under management in excess of N40 billion as at June 30 2019.