VAT On Pre-February Contracts Remains 5% – FEC

The Federal Executive Council (FEC) has said that Value-Added Tax (VAT) on contracts signed earlier than February 1 2020 will be charged at 5%.

The senior special assistant, media and publicity to the President, Garba Shehu, disclosed on Wednesday after FEC meeting presided over by President, Muhammadu Buhari.

According to Shehu, “By law, the new VAT came into effect first of February; government had worried about the implication of this on contracts that had been issued earlier than this year.

“Some of the contracts that are been handled by various ministries, particularly Ministry of Works, for instance, are coming from many years back; so should the VAT on payments on such contracts be 7.5 % or 5 % as earlier signed unto.

“A final decision was reached today; and this is that new contracts that are signed from Feb.1 going forward will attract 7.5 per cent VAT.

“Contracts earlier than Feb. 1 signed on 5 per cent VAT will remain at 5 per cent; so there is no more confusion on this matter.”