VAT Revenue in Nigeria is in focus as the Nigerian Government has revealed plans to increase Value Added Tax (VAT) revenue to ₦45 trillion in the 2026 fiscal year.
According to the 2024-2026 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) sent by President Bola Tinubu to the National Assembly in the previous week, the federal government plans to increase VAT revenue from an average of ₦35 trillion in 2024, to N40 trillion in 2025 and ₦45 trillion in 2026 fiscal years, respectively.
The document disclosed that the VAT revenue increment was projected using gauged aggregate nominal consumption, considering vatable items and collection efficiency.
Consumption expenditure on which VAT is charged is estimated to rise from an average of ₦35 trillion in 2024, to ₦40 trillion in 2025 and ₦45 trillion in 2026, after calibrating for exemptions, zero-rated items, and companies whose turnover is not up to the ₦25 million threshold.
There are plans to expand the VAT tax base using the execution of the provisions of the various Finance Acts.
The VAT estimations over the medium-term are based on holding the rate at 7.5%.
VAT Revenue in Nigeria: The Projected ‘Non-Oil Revenue Assumptions’
The document also contained information about the projected ‘Non-Oil revenue assumptions’.
According to its contents, as the amount of revenue generated from crude oil is currently decreasing, the government has persistently executed different refinement measures to further expand the revenue base, update and further ameliorate tax administration, and improve non-oil revenue collections.
The medium-term non-oil revenue predictions are based on the sustenance and expedition of these improvement efforts by the new Administration to increase the contribution of non-oil revenue sources to funding the FGN budget.
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