Boosting Economic Growth: Analysis of the Nigeria Finance Act 2019


The Nigeria Finance Act of 2019 marked a significant step towards achieving sustainable economic growth and development in the country. Introduced to complement the provisions of the 2019 budget, the Act aimed to create a conducive business environment, promote investment, and strengthen the fiscal framework. As a leading accounting firm in Nigeria, we delve into the key aspects of the Nigeria Finance Act 2019 and analyze its potential impact on boosting economic growth.

1. Value Added Tax (VAT) Rate Increase:

One of the major changes introduced by the Finance Act 2019 was the increase in the Value Added Tax (VAT) rate from 5% to 7.5%. This adjustment sought to bolster government revenue and support public service delivery. By increasing the VAT collection, the government has more resources to invest in critical infrastructure and social programs that contribute to economic growth.

2. Expansion of VAT Coverage:

The Act also expanded the scope of goods and services subject to VAT. Items that were previously exempted, such as lease rentals, aircraft maintenance, and passenger transportation services, are now included in the VAT net. This expansion widened the tax base, increasing VAT revenues and providing the government with additional resources to invest in vital sectors of the economy.

3. Tax Incentives for Priority Industries:

To stimulate investment and drive economic diversification, the Finance Act 2019 extended the pioneer status incentive to qualifying businesses. Companies granted pioneer status enjoy a tax holiday for an initial period of three years, exempting them from corporate income tax. This incentive encourages investments in priority industries, fostering technological advancements, job creation, and economic growth.

4. Export Expansion Grant (EEG) Scheme:

The reintroduction of the Export Expansion Grant (EEG) scheme was another significant measure under the Act. This incentive provides grants to businesses engaged in non-oil exports, based on the value of their export volumes. The EEG scheme encourages companies to explore international markets, diversify revenue streams, and reduce Nigeria’s dependence on oil exports.

5. Digital Services Tax (DST):

The Finance Act 2019 addressed the taxation challenges posed by the digital economy by introducing the Digital Services Tax (DST). Foreign companies providing digital services to Nigerian consumers without a physical presence in the country are subject to DST at a rate of 2% of their gross revenue. This measure ensures that multinational digital service providers contribute their fair share to Nigeria’s tax revenue.

6. Strengthened Transfer Pricing Regulations:

The Act aligned Nigeria’s transfer pricing regulations with international best practices, as set by the organization for Economic Co-operation and Development (OECD). Strengthened transfer pricing regulations deter multinational companies from manipulating prices in related-party transactions, ensuring fair taxation and preventing base erosion and profit shifting (BEPS).


The Nigeria Finance Act 2019 represents a comprehensive effort by the government to boost economic growth and development in the country. By increasing the VAT rate and expanding the VAT coverage, the Act aims to generate additional revenue to fund critical infrastructure and public services. The tax incentives for priority industries, the reintroduction of the Export Expansion Grant (EEG) scheme, and the Digital Services Tax (DST) encourage investments, stimulate exports, and promote fair taxation in the digital economy.

As an accounting firm in Nigeria, we believe that the Finance Act 2019 lays a solid foundation for fostering sustainable economic growth. By attracting investments in priority industries, encouraging non-oil exports, and optimizing tax collections from the digital economy, the Act supports the government’s efforts to diversify the economy and drive inclusive growth for the benefit of all Nigerians.

For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, Company Registration, and CAC matters, please contact Sunmola David & CO (Chartered Accountants & Tax Practitioners) at You can also reach us via WhatsApp at +2348038460036.