FG confirms plans to increase VAT
The Federal Government has announced plans to increase the Value Added Tax (VAT) rate.
Finance Minister and Coordinating Minister of the Economy, Wale Edun, made the disclosure during an investor meeting at the ongoing IMF/World Bank Annual Meetings in Washington, D.C.
Finance Minister Wale Edun stated that the upcoming increase in Value Added Tax (VAT) will primarily target luxury goods. The proposed VAT hike, currently under consideration by the National Assembly, will be implemented gradually and will exempt essential items consumed by poorer and vulnerable Nigerians.
Edun emphasized that a list of essential goods that will remain VAT-exempt or subject to a zero rate will be made public soon. He remarked, “President Bola Tinubu is committed to protecting the poorest and most vulnerable while implementing necessary reforms. The bills in the National Assembly will raise VAT on luxury goods for the wealthy, while essentials for average citizens will be exempted or have a zero rate.”
In September, Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, mentioned that the committee is proposing to raise the VAT from the current rate of 7.5% to 10%. He noted the urgent need to address the country’s low tax revenue and overall fiscal challenges, stating, “If we dedicated all our revenue to fixing roads, it would be insufficient.”
The proposed law aims to increase VAT to 10% starting in 2025, although it remains uncertain when the National Assembly will pass it, with further increases also indicated for subsequent years.
Proofreading by Uchechi Ojo, Sub-editor at Neptune Prime.
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