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Nigeria is seeking to raise its VAT in a gradual progression from 7.5 per cent up to 15 per cent by 2027, a move that was equally proposed in 2019 but sparked heavy criticism and was jettisoned on the account that it would fuel hardship.
Taiwo Oyedele, chairman of the Presidential Tax Reform and Fiscal Policy, Nigeria says the proposed increment in Value Added Tax (VAT) will reduce inflationary pressures contrary to the views that it would stoke prices.
The tax chief said in a statement that the series of policies aimed at overhauling Nigeria’s tax system would bring the needed relief for the over 200 million citizens who are reeling from a cost-of-living crisis fuelled by the twin reforms implemented mid-last year.
Nigeria is seeking to raise its VAT in a gradual progression from 7.5 per cent up to 15 per cent by 2027, a move that was equally proposed in 2019 but sparked heavy criticism and was jettisoned on the account that it would fuel hardship.
Oyedele however clarified that unlike the 2019 proposed tax reforms that were not accompanied by cost-cutting measures, the current proposal involves measures to minimize production costs, reduce the incidence of VAT on most essential consumptions, and exempt more small businesses from charging VAT.
He argued that inflation occurs when there is a general increase in the prices of goods and services, emphasizing that an increase in the VAT rate may lead to an increase in prices thereby causing inflation.
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The proposed VAT reforms will see the reduction of the VAT rate to 0% and the exemption for essential items accounting for 82% (about 4 out of 5 items) consumed by the masses including food, medical services and pharmaceutical products, tuition, and other educational expenses, transportation, fuel products, and rent.
