Consumption tax, also known as value-added tax (VAT) may soon become higher in Nigeria.
According to a report by The Cable, the National Assembly is reportedly considering a bill to increase value-added tax (VAT) from 7.5% to 10% by 2025. The legislature also intends to increase VAT to 12.5% by 2026 through 2029.
“VAT shall be charged on the value of all taxable supplies at the following rates (a) 2025 year of assessment 10%; (b) 2026, 2027 2028 and 2029 years of assessment 12.5% (c) 2030 year of assessment and thereafter, 15%,” the document reads.
On May 8, Taiwo Oyedele, chairman of the presidential committee on fiscal policy and tax reforms, said Nigeria needed to increase its VAT rates.
Read Also: VAT remains 7.5%, no plans to make it 10%, says Edun
In recent months, speculations around the government’s intention to raise VAT have become more intense. However, Wale Edun, the Minister of Finance and Coordinating Minister of the Economy, denied it in September.
Nigerian consumers have been under persistent pressure due to inflation and a weakening economy. Hence, there is controversy about a new bill that will increase spending taxation.
Meanwhile, the corporate world will be on the positive end of this new bill. It seeks to cut corporate income tax (CIT) to 27.5% by 2025 — down from 30% — and a further cut to 25% by 2026. The bill also exempts companies with less than N20 million from paying CIT.
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