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FG Hikes VAT on Luxury Goods, Okays New Tax Regime

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VAT Nigeria Tax hike

By Modupe Gbadeyanka

Federal Government has introduced a new tax regime in a bid to grow its revenue base so as to reflate dwindling economy.

At the Federal Executive Council (FEC) held on Wednesday in Abuja, which was presided over by the Acting President, Mr Yemi Osinbajo, the FG said that the Value Added Tax (VAT) on luxury goods will go up, while for basic goods will remain unchanged.

However, Minister of Finance, Mrs Kemi Adeosun, said the National Assembly will decide the rate.”

Briefing newsmen yesterday, the Minister pointed out that VAT on luxury goods must increase because in the United Kingdom, 20 percent is paid for such.

“What the committee has shown is that we should look at actually increasing VAT on some luxury items.

“At five per cent, we have the lowest VAT among our peers and whilst we don’t think VAT should be increased on basic items, if you are going to drink Champagne, for instance, you should pay more.

“Champagne in the UK attracts VAT of 20 per cent, so why should it be five per cent in Nigeria?

“So, they have made recommendations that we should identify some luxury items and increase VAT on those items immediately.

“And I think that is a very valid and sensible suggestion which we are going to talk to the National Assembly about to see how we can implement it.

“But as far as basic goods are concerned, there will be no increase. I believe it is only fair that when you consume luxury goods you should pay a little bit more. But the National Assembly will decide the rate,” she said.

Mrs Adeosun revealed that the executive will work with the National Assembly on the revised National Tax Policy before its implementation.

Modupe Gbadeyanka is a fast-rising journalist with Business Post Nigeria. Her passion for journalism is amazing. She is willing to learn more with a view to becoming one of the best pen-pushers in Nigeria. Her role models are the duo of CNN's Richard Quest and Christiane Amanpour.

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Economy

Naira Weakens to N1,660/$1 at NAFEM, Stable at N1,750/$1 at Black Market

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funds in Naira accounts

By Adedapo Adesanya

The Naira weakened against the Dollar by 0.08 per cent or N1.39 to N1,660.83/$1 in the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Wednesday, November 27, from the preceding day’s value of N1,659.44/$1.

However, the value of the domestic currency remained stable against the Pound Sterling and the Euro in the official market yesterday at N2,116.44/£1 and N1,788.98/€1.

It was observed that the FX turnover for the trading session went down by 20.9 per cent or $88.91 million to $337.07 million from the $425.98 million recorded a day earlier, according to data obtained from FMDQ Securities Exchange.

As for the black market, the exchange rate of the Nigerian Naira to the US Dollar remained unchanged at the midweek session at N1,750/$1, according to data harvested by Business Post.

Speaking at the end of the 298th Monetary Policy Committee (MPC) meeting, the Governor of the Central Bank of Nigeria (CBN), Mr Yemi Cardoso, said the apex bank remains committed to its core mandate of price and exchange rate stability in anchoring inflation.

“Members thus focused on the optimal policy choice to address the uptrend in price development, stabilize the exchange rate and anchor inflation expectations appropriately,” Mr Cardoso said.

In the cryptocurrency market, prices were largely positive for benchmarked tokens ahead of Thanksgiving weekend in the US which has historically recorded sudden price dumps.

Rising activity and a bump in revenue, fees, new wallets and on-chain volumes have also indicated further support for digital assets, which has gained support from an expected friendly environment in the US next year.

Ripple (XRP) grew by 7.4 per cent to $1.47, Binance Coin (BNB) appreciated by 5.3 per cent to $650.61, Ethereum (ETH) rose by 4.9 per cent to $3,571.110, Cardano (ADA) expanded by 4.4 per cent to $1.00, Solana (SOL) jumped by 3.4 per cent to $237.39, Dogecoin (DOGE) increased by 3.1 per cent to $0.4035, Bitcoin (BTC) went up by 2.6 per cent to $95,288.95 and Litecoin (LTC) gained 2.4 per cent to settle at $64.89, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) traded flat at $1.00 apiece.

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Economy

Oil Prices Slip Amid Build in US Petrol Stock, Interest Rate Cut Worries

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oil prices cancel iran deal

By Adedapo Adesanya

Oil prices slid marginally on Wednesday, fuelled by a build in US petroleum stocks and worries about US interest rate cuts next year, with Brent crude futures losing 2 cents to trade at $72.83 a barrel and the US West Texas Intermediate (WTI) crude shedding 5 cents to sell for $68.72 per barrel.

Data from the Energy Information Administration (EIA) said US gasoline stocks rose by 3.3 million barrels in the week to 212.2 million barrels, indicating a decline in demand.

Crude stocks fell by 1.8 million barrels in the week ended November 22, the EIA added, countering the American Petroleum Institute (API) which said on Tuesday that oil inventories fell by 5.94 million barrels and fuel inventories rose last week.

Slowing fuel demand growth in top consumers the US and China have weighed heavily on oil prices this year, although supply curtailments from the Organisation of the Petroleum Exporting Countries and its allies, OPEC+  have limited the losses.

OPEC+ will meet on Sunday, December 1 and there is an increasing possibility that members have been discussing a further delay to a planned oil output hike that was due to start in January.

OPEC+ which produces about half of the world’s oil, had aimed to gradually ease production cuts through 2024 and 2025, but weaker global demand and rising output outside the group have cast doubt on that plan.

The market is also expecting the US Federal Reserve to lower borrowing costs by 25 basis points at its December 17-18 meeting.

However, there is also anticipation that the US central bank will leave rates unchanged at its meetings in January and March.

Slower-than-expected rate cuts would keep the cost of borrowing elevated, which could slow economic activity and dampen oil demand.

Prices drew support from concerns about supply eased after a ceasefire deal between Israel and Hezbollah brokered by the US and France.

The ceasefire started on Wednesday and helped ease concerns that the conflict could disrupt oil supplies from the top-producing Middle East region.

Market participants are uncertain how long the break in the fighting will hold, with the broader geopolitical backdrop for oil remaining.

There is also an increased possibility that oil may not be exempted from the 25 per cent tariffs that incoming US President Donald Trump has threatened to impose on all products coming into the US from OPEC+ member Mexico and Canada.

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Economy

Bears Take Over Customs Street as Investors Lose N208bn

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Customs Street NGX

By Dipo Olowookere

The Nigerian Exchange (NGX) Limited reversed the gains of the previous trading session to plunge by 0.35 per cent on Wednesday.

This was triggered by profit-taking from investors who chew on the 0.25 per cent interest rate hike by the Central Bank of Nigeria (CBN) on Tuesday. The Monetary Policy Rate (MPR) is currently at 27.50 per cent and the inflation for October stands at 33.88 per cent.

Business Post reports that the selling pressure was visible seen in the consumer goods sector, which went down by 0.34 per cent yesterday, erasing the gains recorded by the others.

The insurance index appreciated by 1.24 per cent, the energy counter improved by 1.02 per cent, the banking space jumped by 0.14 per cent, and the industrial goods sector gained 0.02 per cent.

At the close of business, the All-Share Index (ASI) contracted by 348.31 points to 97,296.57 points from 97,639.88 points and the market capitalisation declined by N208 billion to N58.970 trillion from N59.178 trillion.

Investor sentiment was weak at midweek after Customs Street ended with 23 price gainers and 26 price losers, representing a negative market breadth index.

John Holt lost 10.00 per cent to finish at N9.90, Aradel Holdings declined by 9.98 per cent to N473.30, Eterna slumped by 9.88 per cent to N22.35, Haldane McCall shed 8.43 per cent to N5.65, and UPDC crumbled by 8.13 per cent to N1.47.

On the flip side, Sunu Assurances gained 9.97 per cent to trade at N4.19, Guinea Insurance grew by 8.16 per cent to 53 Kobo, Conoil rose by 6.56 per cent to N276.00, DAAR Communications expanded by 6.56 per cent to 65 Kobo, and NASCON improved by 6.23 per cent to N32.40.

A total of 822.5 million equities valued at N10.3 billion were traded in 9,385 deals on Wednesday compared with the 552.1 million equities worth N8.0 billion transacted in 9,305 deals on Tuesday, indicating an increase in the trading volume, value, and number of deals by 48.98 per cent, 28.75 per cent, and 0.86 per cent, respectively.

The most active stock for the session was Haldane McCall, which sold 373.7 million units for N2.2 billion, Japaul transacted 115.9 million units worth N285.5 million, Tantalizers traded 30.7 million units valued at N34.9 million, UBA exchanged 29.4 million units worth N930.1 million, and GTCO transacted 28.8 million units valued at N1.5 billion.

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