Reported by thisdaylive.com
Emmanuel Addeh and Onyebuchi Ezigbo in Abuja
The Federal Ministry of Health and Social Welfare has announced that government has commenced the implementation of zero Value Added Tax (VAT) and excise duties on pharmaceutical products and medical devices.
The measure is expected to open the doors for local pharmaceutical and medical device manufacturers to benefit from the relief measures outlined by President Bola Tinubu via an Executive Order.
In a statement signed by the Head, Information and Public Relations, Alaba Balogun, the ministry expressed hope that the measure will lead to reduction in the prices of essential pharmaceutical products and medical consumables.
“The ministry is pleased to announce the finalisation of the Executive Order Harmonized Implementation Framework, which has now been cleared for gazetting.
“This critical step ensures that the Federal Inland Revenue Service (FIRS) and the Nigeria Customs Service can proceed with the implementation of zero VAT and excise duties on pharmaceutical products and medical devices.
“This is a significant milestone, as it opens the door for our local pharmaceutical and medical device manufacturers to begin fully benefiting from the relief measures outlined by President Bola Tinubu, in the Executive Order.
“With the implementation of this Executive Order, we anticipate a notable reduction in the prices of essential pharmaceutical products and medical consumables,” it said .
According to the statement, the development aligned with the ministry’s commitment to reducing both the physical and financial pain faced by millions of Nigerians who depend on these critical health supplies.
It said the gazetting of the harmonised implementation framework represented the realisation of the third pillar of the ministry’s four-point agenda, which focuses on unlocking the healthcare value chain.
“By creating an environment that supports local manufacturers, we are fostering a healthier, more self-reliant nation, and ensuring that quality healthcare becomes more accessible and affordable for all.
“The gazetted copies of the Harmonised Implementation Framework will be distributed to the relevant government agencies for immediate action,” Balogun said.
Meanwhile, a leading accounting firm, Kreston Pedabo, has cautioned that identified gaps in the newly introduced 2024 Value Added Tax (VAT) Modification Order could hinder its effective implementation in the country’s energy sector.
The federal government introduced the Order to expand tax exemptions, encourage renewable energy adoption and resolve ambiguities surrounding the taxation of petroleum products.
But Partner, Tax Services, Olubunmi Kuteyi and Manager, Tax Advisory at Kreston Pedabo, Oluwasanmi Ogunsanwo, in a note, warned that the retrospective nature of the new regulations could cause confusion for taxpayers, especially within the oil and gas industry.
The Order exempts certain petroleum products from VAT while expanding tax relief for renewable energy investments. The government had previously suspended VAT on diesel, from October 2023 to March 2024, to mitigate the impact of fuel subsidy removal.
But with the new Order, exempting diesel from VAT retroactively, effective October 1, 2023 have raised posers over the tax remitted during the lapse of the suspension.
“What happens to VAT paid and remitted between March 2024 and September 2024, following the suspension’s expiration? Are taxpayers eligible for a refund for VAT paid during this period?”, the tax experts asked.
The accounting firm argued that this retroactive effect might lead to uncertainty and agitation among oil and gas taxpayers, calling on the Federal Inland Revenue Service (FIRS) to offer immediate clarification to ease confusion and ensure compliance.
The VAT Order also introduced tax exemptions for Compressed Natural Gas (CNG) and Liquefied Petroleum Gas (LPG) conversion kits, infrastructure, and electric vehicle (EV) equipment, as well as Biogas technology.
These updates aim to promote renewable energy investments and reduce Nigeria’s reliance on imported fossil fuels.
The redefinition of petroleum products now includes feed gas, aviation turbine kerosene, and compressed natural gas, simplifying the tax system and encouraging cleaner energy use.
Although it praised the government’s renewable energy focus, the firm noted the need for seamless implementation to avoid disruptions. It called on the FIRS to host stakeholder engagement forums to address ambiguities and ensure a smooth transition into the new tax regime.
It warned that unresolved issues surrounding the retroactive diesel VAT exemption could create challenges for taxpayers in the oil and gas sector.
Besides, it called on the FIRS to clarify the concerns, explaining that timely resolutions would maintain taxpayers’ confidence and foster a stable investment environment.
