NASS plans to increase VAT to 10% by 2025
The National Assembly is reviewing a bill to raise the Value-Added Tax (VAT) from 7.5% to 10%.
According to an executive bill, the proposed increase aims for implementation by 2025.
The legislature also plans to raise the VAT to 12.5% between 2026 and 2029, as outlined in the document.
On May 8, 2024, Mr. Taiwo Oyedele, chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, stated the need to increase the VAT rate.
The proposed bill also suggests reducing the corporate income tax (CIT) from 30% to 27.5% by 2025, with a further decrease to 25% by 2026. Companies with an annual turnover of less than N20 million would be exempt from CIT.
The document outlines the VAT rates as follows: 10% for the 2025 assessment year, 12.5% for the assessments from 2026 to 2029, and 15% starting from the 2030 assessment year.
Regarding corporate tax, it specifies that for each assessment year: small companies will be taxed at 0%, while other companies will face a tax rate of 27.5% in 2025 and 25% from 2026 onward.
Additionally, if a company’s effective tax rate is below 15% in any assessment year, it must recompute and pay an additional tax to ensure its effective rate equals 15%. This provision applies to both multinational enterprise (MNE) group constituents and any company with an aggregate turnover of N20 billion or more in the relevant assessment year.
“Companies subject to this section and the calculation of any additional tax owed will follow regulations established by the Service.”
Proofreading by Uchechi Ojo, Sub-editor at Neptune Prime.
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