Nigeria Plans VAT Increase to 10%, Offers Tax Cuts. The Presidential Committee on Fiscal Policy and Tax Reforms has proposed raising Nigeria’s Value Added Tax (VAT) from the current 7.5% to 10% by 2025, as part of sweeping measures to address the nation’s fiscal challenges.
Chairman of the committee, Taiwo Oyedele, revealed the recommendation during a recent interview on television through Channels TV’s Politics Today programme anchored by Seun Okinbaloye.
He highlighted the urgent need to address Nigeria’s tax and revenue system, describing the fiscal situation as being in a “crisis state.”
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“We face serious issues with tax revenue and non-tax revenue, leading to an overall crisis in the fiscal system,” Oyedele explained.
He outlined the committee’s three main areas of focus: improving governance over national finances, transforming the country’s revenue profile, and optimizing government assets.
One of the key proposals is to increase VAT to 10% starting in 2025, with further hikes planned for subsequent years, depending on when the National Assembly passes the law.
At the same time, the committee recommends a significant reduction in personal and corporate income taxes to ease the burden on individuals and businesses.
“People earning N1.5 million or less per month will see a reduction in their personal income tax. Corporate tax rates, currently at 30%, will drop to 25% over the next two years,” Oyedele added.
To simplify the tax burden for businesses, Oyedele announced plans to consolidate multiple taxes, such as the IT levy and education tax, into a single payment, initially set at 4% but expected to decrease to 2% in coming years.
These reforms are aimed at balancing the need to increase government revenue while offering relief to individuals and businesses, as Nigeria grapples with economic pressures and an overextended fiscal system.
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