The federal government has put forward a proposal to raise the Value Added Tax (VAT) from 7.5% to 10%.
This proposal is encapsulated in an executive bill currently under consideration by the National Assembly.
Reports indicate that the government plans to implement further increments, targeting a VAT of 12.5% by 2026, increasing to 15% starting in 2030.
The legislative document outlines a gradual increase in VAT rates across several assessment years.
Earlier discussions around VAT included insights from Taiwo Oyedele, chairman of the presidential committee on fiscal policy and tax reforms, who previously stated the necessity for a VAT increase.
In contrast, Finance Minister Wale Edun had clarified that the VAT rate had not yet been modified.
In addition to the VAT hike, the bill also suggests a reduction in the Corporate Income Tax (CIT) from 30% to 27.5% by 2025, with a further decrease to 25% in 2026.
Small businesses with annual turnovers below ₦20 million will not be subject to this tax.
The document further stipulates that companies falling under certain categories with an effective tax rate below 15% must pay an additional tax to meet that minimum threshold.
This measure aims to bolster compliance among larger corporations.
Furthermore, the federal government recently published new withholding tax regulations, set to take effect on January 1, 2025, as part of its ongoing tax reform agenda.
These proposed changes reflect the government’s intention to adapt the taxation framework to stimulate economic activity while managing fiscal responsibilities.
