The Nigerian government has confirmed plans to increase the Value Added Tax (VAT) rate, focusing primarily on luxury goods.
Finance Minister and Coordinating Minister of the Economy, Wale Edun, announced the this during an investor meeting at the IMF/World Bank Annual Meetings in Washington, DC.
Edun explained that the proposed VAT hike is being reviewed by the National Assembly and will be introduced in phases.
The increase is intended to affect high-end products, while essential items consumed by low-income and vulnerable citizens will either be VAT-exempt or attract a zero rate.
“In terms of VAT, President Bola Tinubu’s commitment is that while implementing difficult and wide-ranging but necessary reforms, the poorest and most vulnerable will be protected.
“So, the Bills going through the National Assembly in terms of VAT will raise VAT for the wealthy on luxury goods, while at the same time exempting or applying a zero rate to essentials that the poor and average citizens purchase.” Edun stated.
A list of essential goods that will remain VAT-free will be published soon, according to the minister. He added that this is part of the government’s strategy to balance revenue generation with social responsibility.
In September, Taiwo Oyedele, the Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, indicated plans for an increase in the Value Added Tax (VAT).
The committee also proposed raising the VAT rate from 7.5% to 10% beginning in 2025, with further increments expected in the following years.
Oyedele expressed concern over Nigeria’s tax revenue system, characterising the fiscal situation as critical. He emphasised the committee’s objectives, which include enhancing governance, increasing revenue, and effectively managing government assets.